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Out-of-town retail set for struggle

Landlords who manage out-of-town retail parks could be in trouble over the next five years, a report from Radius Data Exchange has warned.

Investment into the sector dropped by 80% year-on-year in H1 2019, while increased vacancies and expiring lease terms could suppress the value of these assets.

Retail is being let at too high a rent, as valuations head south and new spaces are built.

Over 50% of retail park leases signed since 1990 expire or will experience a lease break between now and 2025.

The outcome of this is that large swathes of out of town stock will be vacated or revalued – occupiers will look to re-negotiate.

Owing to competition with online retail, average lease lengths decreased over the past 30 years, from 26 years in 1990 to 11 years in 2018.

Data from Local Data Company shows that vacancy rates in retail parks have jumped since 2017, after almost five years of downward movement.

Some landlords are now looking to offload schemes instead of acquiring them.