Historic availability lows in Oxford and Cambridge’s retail warehouse parks continue to offer good growth prospects for ‘stock-picking’ investors choosing “well-located parks with a long-term vision”.
Bidwells’ latest research found Cambridge retail warehouse availability levels remained at historic lows at the end of 2017. There was no availability in Oxford.
The leading property consultancy is predicting the Cambridge to Oxford Arc will adjust well to the sector’s current woes due to the cities’ above average spending power.
The last month has seen a series of retailer failures, with many others announced disappointing profits, but Bidwells still expects to see rental growth of between 1.5%-3.5% in the Cambridge to Oxford Arc, depending on the location and park, in the coming years.
James Lankfer, Partner and Head of Retail and Leisure at Bidwells, said:
“The performance of the Oxford and Cambridge retail warehouse markets illustrates the pressure on the sector, but also the importance of focusing on parks which combine a strong retail and wider leisure experience offer with a robust catchment area.
“Falling consumer spending and failing retailer models are underlying rental falls, which are relatively subdued in the Oxford to Cambridge Arc, but more substantive elsewhere in many other areas of the country.
“The evident pressures in the retail market, exemplified by the demise of Toy R Us and a weakened Next, are showing across sectors and formats, and are now apparent in the retail warehouse market which has until recently remained relatively cocooned from the wider retail woes.
“Positively, the units that have come available on the good parks across the region have been met with strong retailer competition. This bodes well for the replenishing of occupiers as the likes of Toys R Us and others take their leave.
“We expect investor stock picking to become increasingly focused, while there will also be opportunities to reinvent some struggling parks with a new retail-leisure offer.”
Bidwells’ half-yearly research benchmarks Cambridge, Oxford, Milton Keynes, Chelmsford, Norwich and Ipswich across its retail markets.
Take up remained ahead of the trend rate of activity for the last three years over the Bidwells’ market area but prime retail warehouse rents still slipped by an average of 5.6%.
Lankfer added:
“Retailers are facing ongoing structural change in online shopping and a growing proportion of spending diverted to leisure and experience activities. The retailers who will survive these challenges, look set to focus on fewer locations but with an improved experience offer, combined with their online platforms.
“Looking further ahead, plans for major transport infrastructure improvements in the Oxford to Cambridge Arc – and a sharp increase in housing delivery – will present future opportunities for well-located parks with a long-term vision.”
Bidwells research also found:
- The average availability rate across Bidwells locations is 4.1%
- Supply edged up to 256,500 sq ft in 2017, with further increases expected due to the difficulties experienced by Multiyork and Toys R Us
- Prime bulky rents are expected to grow by 2.7% per annum to 2022
- A 65.8% reduction in supply across Bidwells’ locations from peak in 2009
- Take up at a six-year peak across Bidwells’ region, reaching 399,400 sq ft in 2017
