Friday, June 5, 2020

The retail park renaissance

The shifting retail landscape is continuing to cause a ripple of confusion, risk and uncertainty for investors and developers alike, however, innovation has a key part to play in the sector. Paul Starbuck from retail, sport and leisure specialists LK2 considers how this unpredictable landscape could be the ideal backdrop for revitalising the world of retail as we know it.

Looking at the headlines and news across the retail sector, even in just the last three months, it is remarkable to see how volatile the market has been – DIY and the ‘big-box’ retail formats are declining with traditional flagship brands facing administration, impacting on the long-term health of retail parks.

Not only nationally but regionally we have also seen significant news, including the recent announcement that Valentine Retail Park in Lincoln is now on the market as a £46.33m investment opportunity. The large Lincoln-based retail park is home to Next, TK Maxx, Asda Living, Dreams, DFS, AHF, American Golf, Harveys, Costa and Carphone Warehouse and most recently Hobbycraft. Considering the success of the park, it is interesting that it is being sold at this time, while it is still expanding and securing new brands.

The question we have to ask is; what does this all mean? I believe it possibly indicates a desire for some retail developers to downsize and strip-back their retail portfolios. This isn’t something unheard of, and in many cases is being linked to the risks associated with retail at this time. Very recently, Hammerson – a large shopping centre owner – backed away from a £3.4bn deal to buy its rival intu’s portfolio of UK-wide centres. The reason cited for this change of plan, was Hammerson’s investors’ concerns about the health of the UK high street.

Although the above landscape sounds like it’s filled with doom and gloom, it is important for investors to look at the opportunities that are presenting themselves as a result of this change; in particular the growing demand for experiential and “destination” retail appeal. There is a huge opportunity for leisure, entertainment, community and potentially sports facilities to be become part of our everyday life, especially on retail parks such as Valentine in Lincoln, thereby offering something very different to the norm.

As retail evolves to meet new challenges from the rising popularity of online shopping, retailers don’t need large shop floors and their associated rents and running costs. Therefore, it makes sense to have retailers take up smaller spaces with the remainder of space on retail parks being used for new uses.

Widening the uses of these sites also helps to create an ‘experience destination’, where visitors are able to engage in a range of activities. This increases two key things for business owners: dwell time and customer spend. – rather than spending an hour or two shopping at a retail park, families may be more inclined to spend the day if the right mix of facilities is offered.

There is also the impact sport, leisure and recreation can have on the health and well-being of the nation. Facilities that reflect a change in how we participate in sport, leisure and recreation are fundamental to this; the ‘urban fitness’ and ‘adventure play’ trends provide a rationale and experience that clearly complements the idea of verticality. These new uses provide a varied offering and anchor a site’s reputation as a sport and leisure destination.

Initiatives from organisations such as Sport England can also support the developments in bringing retail, leisure and sport together. Sport England is currently leading the way when it comes to introducing ‘break-out’ sports areas into car parks and general public realm spaces. Developers working with Sport England to support its ‘Towards an Active Nation’ strategy, will see the benefits of a holistic approach that may align to financial support.

Using our unique SportsLab and StreetLab concepts, our team specialise in ‘re-thinking’ spaces in this way. We start by undertaking detailed research into current need for offerings in the area, the space currently available and the opportunities which could be incorporated into it and whether it is possible to build over existing units to exploit “air rights.”

If the new owners of Valentine Retail Park look at another successful retail park in Lincoln, St Marks, they would be able to see how its owners Standard Life Investments are embracing this change. The owners are currently undertaking a £150m redevelopment of the site, with plans including riverside restaurants along the River Witham, a cinema, 1,100 space multi-storey car park, a 130-bed hotel, 1,100 student flats and 150 residential flats.

So, has the world of retail been damaged irrevocably by the internet? I don’t think so, the team at LK2 believe new technology and ways of living will actually drive the retail and leisure sectors to become more community-based, offering real tangible experiences and memories to consumers.

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