Across the UK the retail and leisure and hospitality sectors have all suffered extensively from both the pandemic and its associated effects.
While much of the retail sector remained open during the second and third (autumn and winter) lockdowns, leisure facilities were closed until July ‘21*.
In April BRC-LDV Vacancy Monitor reported the overall retail vacancy rate across the UK had increased to 14.1% in Q1 of 2021, which was 1.9% ahead of the same point last year.
By June, retail sales values had reached 10.6% more than pre-pandemic levels. Over the summer months the return to ‘experiential’ shopping was slower than online sales, which remain substantially higher than before the crisis – 40% ahead of February 2020 levels – and now represent over a quarter by value of retail sales.
The consequences of the pandemic have hastened a decade long shift in consumer behaviour and are clear across Kent’s high streets and retail parks.
Over the year, major brands disappeared, pushing up the number of vacancies. With the pre-pandemic shift to online shopping accelerating, and a limited return to physical retail, all Kent towns experienced an increase in vacancies resulting in lower rents and greater lease flexibility.
There is more evidence of enhanced landlord incentives, flexibility on lease lengths and terms and a growing number of retailers agreeing rents paid monthly in arears*. ‘Covid clauses’ are becoming commonplace, with agreed rent reductions if the store is forced to close.
Average prime Zone A high street rent in Kent has fallen 15% over the last 12 months, driven primarily by the larger retail centres, which felt the loss of national retail brands more acutely.
Tunbridge Wells prime Zone A retail rents are the highest in the county at £111.50 per sq ft (£1,200 per m2), but still reflect the sharpest fall in the county of 30% over the past 12 months.
There were a number of notable investment transactions in Kent
New lettings reflect a shift towards local shopping and experience, including a number of gyms and hospitality lettings. The latter is best illustrated by The Light leisure complex, an eight-screen cinema, nine-lane bowling alley, retro arcade, diner and three bars, which opened at the Spirit of Sittingbourne regeneration scheme in May.
Supermarkets survived relatively unscathed with more developments planned in Maidstone, Ashford and Kings Hill, as well as a new Sainsbury’s that opened in Staplehurst in March.
The out of town market is difficult, though there have been some lettings with Sofology, Decathlon (a first for Kent) and Hobbycraft all opening new stores. Ashford Designer Outlet has seen a strong return to their outdoor environment and has almost fully let its new extension. Bluewater has been hit with many occupiers retaining a presence, but downsizing units. However, there have been some significant lettings too including Zara Concept Store; ProCook, Sleep8, Moyenne and Amazon who recently opened a 3,500 sq ft unit.
Neil Chatterton, Managing Director of Caxtons was keen to point out that while high streets across the county are changing, they are still worth investing in.
“We have seen continued interest in investment opportunities. In January, we completed on the investment sale / purchase of 21 High Street Broadstairs (3,410 sq ft) from Mojon Investments Ltd to Nilacraft Ltd for £423,000 and in February a private individual agreed the sale of 61/61a Mayplace Road East, Barnehurst, Bexleyheath to Kova Workplace Ltd for £305,000.
“Investment has remained active across the Kent retail market and the largest was by Realty Income Corporation who paid £44.95m for the Gillingham Asda superstore at Pier Approach*.
“Although the past year has been challenging for the retail sector, continued investment reflects the long view, and while high streets of the future may look and feel different, there remains a belief that it’s still worth investing in.”
For more detailed information click here for the retail sector performance data and narrative.
Caxtons recently won the EGi Most Active Agent in Kent award for commercial property transactions.
*For further information, please refer to the retail section of the Report.