Savills : Retail rightsizing and repurposing becomes crucial as vacancy rates reach 142 million sq ft

In its latest Re:Imagining Retail report, the firm adds that as consumer trends continue to evolve, without intervention it is estimated that by the end of the decade as much as 308 million sq ft (25%) of retail space could be redundant. The advisor says this highlights the need for retail to be rightsized and repurposed over the coming years.

Mark Garmon-Jones, head of shopping centre investment and repurposing at Savills, comments: 'With the acceleration of retail store closures resulting in an increasing volume of vacant retail space, the case for repurposing has become more prominent than ever. There are few deniers left. We have been advising on over 50 department stores, through to entire shopping centres and retail parks, begin and undergo the transformation to become vibrant mixed use destinations.'

Savills goes on to note that vacancy rates vary across retail pitches. The research shows that vacancy increase outside of the retail core of towns and cities, with 46% of empty units being within tertiary retail pitches (at the edge of retail destinations) compared to 15% in the primary retail pitch (see figure a below). The data demonstrates how retail provision has shrunk or moved within high streets causing marginalisation and more limited occupation at the periphery.

Alan Spencer, head of UK retail at Savills, adds: 'There will always be a place for retail but retailer requirements for bricks and mortar have changed and now is the time to rethink how these locations work. There may be significant challenges facing the sector but the fundamentals of quality retail and leisure destinations remain, with the right offer in the right place being best placed to embrace these changes.'

The research also shows that there is an increasing proportion of vacant units that are empty for long periods of time, with 40% of vacant units having been empty for three or more years. This equates to 60 million sq ft of space that is arguably no longer needed for retail and should instead be redeveloped or retrofit to something of greater social and financial value.

The new report from Savills highlights that in light of these figures, the opportunity for repurposing redundant retail space into alternative uses is growing significantly. The firm notes that interest from the co-working, healthcare and medical, life sciences and education sectors continues to grow, with vacant retail space offering innovative opportunities for each of these industries to expand into retail locations and provide renewed footfall into our towns and city centres.

Tom Whittington, retail and leisure research director, also comments: 'The declining need for retail space is by no means a new phenomenon - the number of retail outlets has been falling for some time - but we are now at a crucial stage where retail needs to be rightsized, not replaced. Non-retail uses will play a vital role in this transformation and we are presented with a once in a generation opportunity to create better places that serve greater financial, economic and social value.'