Elsewhere within the bulky goods sector, Wren Living and Oak Furnitureland are selectively acquiring with Wren also increasingly looking at store extensions to accommodate larger format stores in the order of 15,000 sq ft. Dreams are also expanding again following their administration two years ago and have opened a number of new stores in Scotland in the past 12 months.
Pets at Home are targeting smaller catchments such as Lanark and Linlithgow to continue their expansion within Scotland as well as continuing to target infill stores in larger catchments such as Aberdeen.
Steinhoff, who operate the Harveys and Bensons Bed fascias, are seeking to integrate Bensons at mezzanine level within several existing Harveys stores.
DSG continue to try and right size their portfolio with Currys/ PC World 2-in-1 stores which often requires a surplus store disposal - the requirement for Scotland is now between 10,000-15,000 sq ft unless in larger catchments.
The DIY sector
Within the DIY sector, in spite of B&Q’s announcement to close 60 stores UK wide, they have only closed one store in Scotland at Kingsway East Retail Park, Dundee which had come to the end of it’s lease. They have no plans for other closures in Scotland at present but are working on downsizing certain stores, especially within the greater Glasgow area where they have seven Warehouse format stores.
Homebase, who announced in October 2014 that they would close 25% of their stores by February 2018, have already closed a number of stores in Scotland some of which have gone to The Range and B&M usually in group assignation deals. Within certain stores, Homebase are creating Argos digital concession outlets to diversify their offer. Wickes aren’t currently actively acquiring new stores in Scotland despite talk of looking at smaller formats.
Outside the bulky sector, a flagship new entrant during the same period has been Nike who have opened four new stores - two in Edinburgh and two on the outskirts of Glasgow in Bishopbriggs and East Kilbride and they are actively considering several more.
M&S continue to roll out their Simply Food format quite aggressively both on retail parks and on standalone / cluster developments and in addition they have just opened their new 80,000 sq ft flagship GM store at Glasgow Fort Shopping Park in May 2015 in the latest extension to the park.
Next have continued their expansion of the home and fashion superstore format with the opening of their new store at Fife Central Retail Park, Kirkcaldy and rumour has it they are about to commit to the Homebase at Straiton Retail Park, Edinburgh for this larger format relocating from the 20,000 sq ft home and fashion store they only opened just under three years ago elsewhere on the park.
The discount sector
The discount sector remains the most active sector of the market. In addition to The Range, B&M and Home Bargains have probably been two of the most active retailers in Scotland both in terms number of stores acquired and by floorspace. The discounters have competed for space on may occasions, particularly B&M and The Range, as both have been in dialogue with Homebase to take on a number of their leasehold liabilities in Ayr, Falkirk, Kilmarnock and Kirkcaldy to name a few.
Home Bargain are now hooking up with the likes of Aldi to secure space where they view themselves as complimentary retailers. TK Maxx and other ‘pound’ retailers have continued to be active, as have Sports Direct and Brantano. Smyth’s Toys remain reasonably active having opened in Inverness last autumn and they are due to open in Kilmarnock this autumn.
Toys R Us, despite vacating their flagship store at Fort Kinnaird last October to facilitate it’s redevelopment for Primark, had taken temporary lets in a number of locations around Edinburgh but are still searching for a permanent outlet in the city.
The majority of the space that came back onto the market 2 – 3 years ago has now been re-let and indeed this facilitated the arrival some new entrants into the Scottish market. For the first time since the downturn we are starting to see the return of financially viable asset management opportunities on retail parks.
Whilst the asset management opportunities might not necessarily lead to immediate rental growth it is at least allowing landlords to improve their tenant mix which in turn will lay the foundations for future rental growth. This will however have to be tempered with the prospect of lease expiries or break options looming where, in certain cases, landlords will need to be prepared to concede on the level of rent they charge in return for re-gearing leases.
In conjunction with the diminishing levels of vacant accommodation in the market, the key trend we are witnessing is the increase in development activity picking up quite strongly across the spectrum of planning consents. This has been evident at Abbotsinch Retail Park, Paisley where Hammerson have developed out the second phase of 54,000 sq ft which opened in September 2014 and they are on site with a third phase of 20,000 sq ft which will complete imminently and has seen ERV grow by close to 15% in the past year.
The next phase at Port Glasgow looks like it will soon be developed out following Ediston’s site acquisition in 2014 where they are currently in the process of securing pre-lets. Elsewhere, Ediston are also onsite developing a further 35,000 sq ft extension at Heathfield Retail Park, Ayr and the new 58,500 sq.ft Edinburgh West Retail Park, Edinburgh.
Royal London are in the process of securing detailed planning for a third phase of approximately 70,000 sq ft at Halbeath Retail Park, Dunfermline where the majority of the space is all accounted for and which should go on site in 2016.
A further sure sign of the development sector picking up is London & Scottish Investments recent unconditional purchase of the Scottish Tesco development portfolio which includes sites in Aviemore, Cupar, Crieff, East Kilbride and Paisley to name a few where it is expected they will mainly be anchored by discount food, or M&S Simply Food in certain cases, and will aim to attract other discounters alongside. We expect that development activity will continue to pick up as the economy improves and the stock of vacant space diminishes further.
Looking forward to 2016 and beyond, we expect current positive trends in the sector to continue as retailer confidence strengthens further. This, in turn, will filter through to rental growth within existing assets and drive development activity in locations where appropriate accommodation is not currently available.