Q2 2017 S.P.E.C.S Score

■ Our overall S.P.E.C.S score for the second quarter is 15, a slight fall from the record score reached in the first quarter of the year.

■ Timescales in all sectors and geographies remain static as the development pipeline of new projects remains steady. Whilst most sectors are still seeing costs rise it is interesting to note that some sectors have stabilised, warehousing in particular, and that costs for occupier fit outs in regional markets have a downward pressure which could be attributed to higher than normal contractor availability.

^{*Timescales definition: The time taken from project sign off to project commencement including the procurement and delivery of building components}

^{Source: Savills Building and Project Consultancy}

^{Source: Savills Research}

The evolution of retailing placing new demands on the physical store

■ The structural shift currently taking place within retailing due to the growth in online is having a number of impacts on retailer estate strategies and in turn retail property.

■ However, it is not a case of offline vs online. For example, some of the biggest online retailers operate a physical store network, John Lewis being a prime example. We are also seeing a number of 'pure play' e-tailers make the leap to bricks and mortar retailing. Fashion brands have been the most active in making this transition accounting for almost 30% of pure play retailers who made the transition to omnichannel retailing with the opening of stores (Graph 2). Customer preferences to 'touch and feel' product before purchase being a key part of this move to physical retailing. The most recent and high profile example of this being Missguided who opened their first store in Westfield's Stratford centre.

^{Source: Savills Research Retail Revolutions: From Digital to Physical}

■ The transition of e-tailers into physical retailing highlights the continued role the store can play in promoting the brand, driving both online and instore sales. All the more important in light of the projected slowdown in online sales growth and the fact that for some parts of the retail market the majority of sales will continue to take place in stores. GlobalData, for example, forecast that online sales growth will slow to 4.8%, with only 11.5% of health & beauty spend to take place online by 2022.

■ While the 'store' will continue, what is changing in light of the growth in online is the size and number of stores required by retailers. However, it is the digitisation of the in-store experience, across all parts of retailing, and the new ways retailers are using their stores, that will perhaps have the most significant impact on retail property going forward.

■ For landlords the potential impacts of this evolution range from facilitating the delivery of super fast wifi, ensuring space flexibility for innovative fit-outs, facilitating easier customer returns to examining options for an evolution of the landlord and tenant relationship.