Supermarkets grow ahead of shopping malls

Kasmira Jefford
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THE AMOUNT of space being added by UK supermarkets has overtaken that being added by shopping centres for the first time, despite some retailers calling an end to the space race as consumers shift to shopping online.

The pipeline of grocery developments has grown by 67 per cent, or 19.24m square feet (sq ft) since the 2007 credit crisis, research by property advisory firm CBRE shows.

And despite Tesco boss Philip Clarke calling to a halt the expansion of larger, out-of-town supermarkets last year, this format has continued to outpace growth of town centre stores.

In the third quarter, for example, 3.5m sq ft of out-of-town retail space was under construction compared with just 0.46m in town centres.

Overall, the amount of new grocery space being built at the end of September was 3.51m sq ft, up from 2.95 sq ft in March 2013.

“Tesco, Sainsburys and Morrisons have all reduced their new floorspace targets over the last year. However, they are all still expanding,” CBRE director Chris Keen said.

“Tesco is more acquisitive than a year ago. With Waitrose, Marks and Spencer, Aldi and Lidl increasing their space requirements, grocery pipeline contraction still looks a long way off,” he added.

Tesco wrote down around £800m on its UK property portfolio earlier this year, after identifying around 110 plots of land bought five to 10 years ago it no longer plans to develop.

A further 40 sites next to existing stores were put on the market after Tesco chose not to extend those stores.

Sainsbury’s similarly wrote down £92m of property-related costs in the first half of the year after deciding not to go ahead with plans to open supermarkets on 15 sites.

Retailers have instead been focusing their efforts on growing their online operations and ramping up the number of convenience stores in response to changing consumer habits.

But despite convenience being one of the fastest growing areas for supermarkets, CBRE said these stores still contributed relatively little additional grocery space.

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