Just a handful of a new breed of out-of-town retail parks have driven Birmingham and the Midlands to the top of the rents league*, according to a new survey by Cushman & Wakefield.
The Birmingham office of the leading global real estate services firm has revealed that prime headline rents for what are known as ‘prime open A1 non-food’ developments are higher in the Midlands than anywhere else, with the exception of Leeds and Guildford.
‘Prime open A1 non-food’ developments are those where planning has been relaxed to allow leading fashion retailers to open up branches, as opposed to more traditional ‘bulky goods’ outlets, selling white goods and furniture.
Rob Alston, retail partner at Cushman & Wakefield in Birmingham, said that ‘prime open A1 non-food’ developments were still a relatively new concept, but were proving remarkably successful.
He said that these new developments could command much higher rents than traditional out-of-town retail parks, and even one or two successful schemes could dominate the headline rents achieved in an area such as the Midlands.
One of the leading developments in Birmingham is the Fort in Birmingham, and another top site is Fosse Park in Leicester, which is anchored by a major Marks and Spencer store.
The new Cushman & Wakefield out-of-town retail survey has found that prime rents in Birmingham for the first quarter of 2012 were £47.50 per sq ft, only bettered by Guildford and Leeds at £50. Other locations achieved considerably lower rentals, including Cardiff at £24, Bristol at £34.50 and Manchester at £35. Even London (Croydon) could only manage a figure of £37.50.
Mr Alston said: “The prime open A1 non-food sector is performing the strongest in out-of-town retail, with many of the higher rented schemes generating robust levels of trading turnover, underpinned by good accessibility, a quality shopping environment and diverse tenant mix.
“The Fort has been very successful – it is a very good shopping park, has top brands such as Debenhams and Next and is very well located off the M6.
“Fosse Park is anchored by one of the best Marks and Spencer stores in the country, and is also in a very good location.
“Just one or two of these very successful schemes can become hugely dominant in an area – it’s just the nature of them.”
By comparison, the Cushman & Wakefield survey found that more traditional out-of-town parks are suffering growing problems, including reduced consumer spending and a shift in shopping patterns.
Prime headline rents for these in Birmingham the first quarter of 2012 was only £26.50 per sq ft, a middling performance compared to London (Croydon) at the top, with a figure of £37, and Cardiff at the bottom, achieving just £17.50 per sq ft.
Despite this, Cushman & Wakefield believes the out-of-town market as a whole is expected to remain relatively stable during the remainder of the year.
Mr Alston said: “Nothwithstanding challenging trading conditions, occupier activity is not expected to stagnate.
“Retailers remain particularly cost sensitive, and the shift to cheaper out-of-town locations is not likely to end in the short term.
“A number of retailers and looking to trial new formats and the success of ideas such as ‘click and collect’ is expected to draw new retailers to the out-of-town market.”
Among the new retailers coming in to the market are the discounters, such as Poundland and Poundworld, who, Mr Alston said, were becoming ‘the acceptable face of the High Street’.
(*prime headline rents are based on a hypothetical 7,500 sq ft unit at an assumed prime location)