It is clear that what has made retail parks appealing to consumers since their inception, namely convenient, easily accessible, highly visible roadside locations with large units and adjacent free parking, is what helped them outperform other retail assets during the pandemic, when social distancing was a key part of the public’s consciousness, helping to accelerate a pre-existing trend in the sector, namely the propensity for landlords to increase F&B provision on their retail parks.

As a result, we have seen an explosion in the take-up and space requirements of a number of F&B operators, including, but not limited to, Costa Coffee, Starbucks, Tim Hortons, Five Guys, McDonald's, Burger King and Greggs.

So far this year, the out-of-town market has seen 794 new openings (up to the end of Q3). 31% of those are F&B operators (leisure as a whole accounts for 42% of all new openings). Figure 5 highlights the top 20 most acquisitive brands in the retail warehouse sector in 2022. Six F&B operators appear in the top 20, accounting for as many as 101 units.

This level of competition has had a strong, positive impact on the rents landlords are able to achieve with such operators, evidenced in the distinction in performance of Savills’ deals by size of unit. By far and away the strongest performance was in those units under 2,500 sq ft in 2021, with net effective rental growth of 26.0%, taking the average to £33.83 psf (by comparison, the average for the rest of the out-of-town retail market was £18.59 psf, with a growth of 10.3%).

Looking at the data on our drive-to and drive-thru deals in isolation, average net effective rents are even higher at over £40 psf. This is simply down to the volume of occupiers competing for space at this format. The likes of Costa Coffee and Starbucks are still as acquisitive as they have been in recent years; however, we are also seeing a number of new entrants to this market, all vying for space in this area, including Greggs, Tim Hortons and Five Guys (figure 6). Figure 5 clearly demonstrates the pattern of growth in this sector is likely to continue as we continue to see appetite for acquisitions at this format into Q4 2022.

_{Read the articles within Spotlight: UK Leisure – 2022 below.}