Grocers Look to Expand in Britain in 2010

London, 30 November 2009 – Despite the recession, grocery operators are looking to expand in Britain in 2010. Demand for grocery space remains extremely strong as operators seek to diversify through new formats and expand their non-food offer.

Latest research from CB Richard Ellis (CBRE) shows that the grocery pipeline has increased to 36 million sq ft from 28 million sq ft in 2007. Three quarters of the construction total is accounted for by stand-alone superstores. Grocers are also seeking High Street units for smaller formats and, evidenced by the strong take-up of ex-Woolworths units, town centre sites.

Chris Keen, who leads CBRE’s Supermarket Group, said: A number of developments in the grocery market are contributing to the current demand for space. New formats have been rolled out by ASDA, Morrisons and Waitrose and stores such as Booths (currently with 26 stores across Lancashire, Cumbria, Yorkshire and Cheshire) have begun to expand their portfolio along with Haldanes (mid-size chain in East and West Lothian), who are a new entry to the market.

“In addition some supermarkets are looking to roll-out bigger stores, for example Sainsbury’s are proposing a 150,000 sq ft store in Colchester which is 50,000 sq ft larger than the previous largest requirement that they have had since dropping their Savacentre format.”

In contrast, shopping centre construction is less than half of the 2007 level. Completion levels in 2009 are expected by circa 3.2 m sq ft with significant schemes including St David’s 2 in Cardiff and Union Square in Aberdeen.

Tom McDonough, Associate Director, CBRE Retail Research said: “The only large scale development coming online over the next few years is Westfield’s Stratford City which accounts for a quarter of total floorspace currently under construction. There is also a significant regional variation in pipeline space under construction with Greater London alone accounting for over 40%. This will limit the opportunities for retailers seeking to build national market share.”

Retail warehouse construction has halved since the beginning of 2009 and current development is only located in a few regions with Yorkshire, Scotland and the North-West accounting for 70% of the total.

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