Retail warehouse parks
Retail warehouse parks
The planning squeeze on out-of-town development continues to suppress the overall retail warehouse park development pipeline – according to CB Hillier Parker's latest research. Remarkably, pipeline levels are now at lower levels even than during the early 1990s recession. Despite a short-term burst in construction activity, as developers attempt to bring schemes to fruition in relatively benign economic conditions, overall completion levels are however set to continue falling.
CB Hillier Parker's Head of Out-of-town Retail, Paul Redstone, comments:
It is extremely difficult to obtain planning permission for sites that are viable for retail warehouse park development. Construction activity is up a bit,but the real story can be seen in the plummeting proposal levels. Supply constraints are inevitably piling the pressure on rents.
Retail warehouse parks in the pipeline
An upturn in construction of retail warehouse parks in the pipeline is forecast (see Table III).
Table IIIPhases and extensions in the pipeline
Whilst the overall pipeline continues to shrink, the volume of retail warehouse park floorspace under construction has risen to its highest level for three years.
Over 300,000 m2 gross of floorspace was under construction at the end of March 2000. This compares to only 150,000 m2 gross under construction at the end of 1999 and an average rate of only 200,000 m2gross for the four quarters of 1999.
The total floorspace under construction represents some 16.2 per cent of the total pipeline, higher than any quarter in the whole of the 1990s.
The vast majority (over 88 per cent) of the increase in the total floorspace under construction comprises new phases to existing schemes. The proportion of phases and extensions to existing schemes, which has been steadily rising throughout the 1990s, has now risen to 17.8 per cent of the total pipeline. For floorspace under construction this proportion has risen to almost 31 per cent. These latest figures reveal an upturn in confidence for developers and occupiers as we start the new decade.
Over half of the total amount of floorspace under construction was located in Scotland and the North West of England. This represented five new schemes and eight additional phases to existing schemes, split 50/50 by floorspace. These two regions, with the South East, have the highest level of floorspace in the pipeline. But whilst the South East continues to have the lowest per capita floorspace level, Scotland and the North West with the North, Wales and East Anglia have the highest per capita levels.
Annual completions fell from 401,000 m2 gross in 1998 to just under 292,000 m2 gross for 1999. This is the lowest level of annual completions for six years. With only one completion of 6,700 m2 gross by the end of March 2000, and a number of the schemes under construction not due for completion until 2001, the level of completions for 2000 seemed set to fall further.
The total pipeline fell below the 2 million m2 gross level for the first time in the 1990s at the end December 1999. The total pipeline has continued to fall as we enter the first quarter of 2000. Whilst new schemes or additional phases to existing schemes are still being proposed and approved,they continue to be out paced by the number of schemes that drop out of the pipeline.
Developers have reported that they hoped to complete almost 314,000 m2gross by the end of 2000, in addition to the solitary 6,700 m2 gross scheme completed in the first quarter of 2000.
Our forecast, based on an assessment of those schemes currently under construction and others capable of completion by the end of 2000, however suggested a more modest completion total for 2000 of 275,000 m2gross.
Scheduled openings for 2001 amount to almost 250,000 m2 gross. With the rolling forward of schemes not expected to complete by the end of 2000,we forecast a slightly higher completions total for 2001 of some 255,000 m2gross.
Beyond 2001 the retail warehouse park development market, susceptible as it is to short-term economic trends, becomes more difficult to forecast. We foresee a gradual decline in the level of completions and forecast in the region of 220,000 m2 gross of completions for 2002.
