Applications to build new retail space continue to fall despite recovery

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Applications to build new retail space continue to fall despite recovery

Applications to build new retail space continue to fall despite recovery

E-commerce and overbuilding ahead of recession to blame.

The number of applications to build new retail space has fallen for a sixth year in a row, reveals research by EMW. There were 7,360 planning applications granted for retail premises in 2014/15*, down from 7,420 last year and down 38% from 11,900 at the peak in the expansion of the retail sector in 2008/09.

EMW says that increasing shift towards e-commerce continues to pose a major challenge to both traditional in-town and out-of-town retail and that even the recent economic recovery and increase in consumer spending has not led to any real acceleration in demand for new retail space.

EMW adds that there has been a shift of focus away from a singular aim of expanding store portfolios to increase market share, to a more concerted effort by many retailers and supermarkets to compete with their online rivals by introducing new services, such as "Click and Collect".

The impact of the fall in real wages since the recession has also undermined the assumption that that consumers would continue to allocate an ever increasing proportion of their income to high street shopping. Planning Principal at EMW, explains: "The fall in retail applications reflects a seismic change in shopping habits. High street retailers are opting to provide a greater range of online services as they try to adjust to this more competitive online market."

EMW adds that the changing nature of the retail sector has resulted in many premises being converted to office or residential use. There were 410 units converted from retail to residential use in 2014/15*. The introduction of revised and new Permitted Development Rights in 2013 has made the process of changing the use of retail premises significantly easier, with many instances no longer requiring planning permission.

EMW suggests that another factor behind the fall in retail applications may be an overexpansion of retail space in the years preceding the credit crunch, with many businesses now keen to learn from previous mistakes of high profile retailers and to grow at a more economically sustainable rate.

EMW adds: "There is less incentive to acquire new premises than in previous years. With the exception of some budget supermarkets and discount stores which are looking to increase the number of their units; the underlying trend across the whole sector has been one of retrenchment and a shift towards greater digital services."

The number of planning applications for retail premises has fallen 38% from the peak in 2008/09

*Year end March 31st.