UK Retail Marketbeat Reports

For the data behind the commentary, download the full Q4 2024 UK Retail Report.

2024 in review

2024 was a positive year for the retail and leisure sector. Despite inflation and low consumer confidence, the occupational market remained strong. Prime retail markets saw resilience, competitive tension, and rental growth. Contrary to expectations, physical retail spaces thrived with new flagship stores and international brands entering the UK. Last year highlighted the importance of customer experience and the right retail spaces for successful trading. Investors showed renewed interest, with stable values and pricing. The out-of-town sector captured significant market activity, and investment in shopping centres increased, indicating confidence in well-managed schemes.

What to expect in 2025

The sector is expected to maintain positive momentum into 2025, driven by anticipated improvements in economic conditions and consumer spending. Despite lingering uncertainties around economic recovery, consumer confidence saw an uptick in late 2024, positioning the market for increased spending.

However, the removal of business rates relief following the Autumn budget will impact retailers, particularly those already struggling with recent challenges. This may lead to some difficulties ahead.

In the investment market, sentiment remains strong. Current pricing may encourage some investors to exit assets, increasing the availability of products and boosting overall investment volumes.

National Retail Market Momentum

The occupational market for national retail schemes experienced significant growth throughout the year, driven by buoyant real estate activity from large retailers. Although retail sales volumes remained subdued overall, a sustained focus on re-aligning retail footprints to match post-COVID shopping habits helped restore confidence in the market.

Top centres continued to attract significant interest from large multinational retailers and leading brands, with strong footfall levels drawing new entrants. According to MSCI, the vacancy rate for institutionally held shopping centres, representing a broad range of asset sizes and qualities, decreased to 11.1% of floorspace in 2024. Best-in-class locations saw void levels reduce further, with many schemes operating at less than 3% vacancy. Proactive lease events were utilised to improve tenant line-ups or relocate tenants within the centres. Modest rental growth, first recorded in late 2023, became more widespread. The C&W prime shopping centre index rose to 89 in Q4 2024, up from 85 in Q4 2023.

Out of Town Retail Resilience

Inflationary pressures and a focus on value from households have driven resilience for many operators within the out-of-town market. In 2024, the sector faced continued exposure to business failures, including Homebase and Carpetright. However, competitors like The Range and Tapi absorbed a significant amount of the space brought to market, highlighting the depth of demand within the sector.

Demand has broadened in recent years, with several non-typical premium and fashion-led brands expanding their retail footprints within prime retail parks. According to MSCI, the vacancy rate for institutionally held retail parks increased marginally in 2024, rising to 4% from 3.7% at the end of 2023. Despite this, demand for top retail schemes remained strong, leading landlords to actively sub-divide oversized units, install internal mezzanines, or convert car parking spaces for pod use.

The C&W Prime retail park rental index rose to 98 at the end of 2024, up from 94 at the end of 2023.

Central London Retail Demand

Occupational demand remains robust in Central London, thanks to a diverse range of retailers and a strong line-up of premium and luxury brands. Despite challenging macroeconomic conditions, 2024 saw numerous announcements of upsizes, relocations, and new flagship stores.

Key streets and estates have strengthened tenant line-ups, focusing on curating experiences and attracting higher footfall throughout the year. Consequently, many of the city's major shopping destinations saw reduced availability levels in 2024, with tenants quickly securing corner locations and double-height shopfronts along key streets.

The market's continued resilience sustained competitive tension in 2024, leading to shorter void periods, a tighter supply of available space, and upward rental pressure. Average rents across 35 London locations tracked by Cushman and Wakefield increased by 7.57% at the end of 2024 compared to the end of 2023.

F&B and Leisure Sector

Despite a significant uplift in trading revenues during the final quarter, the F&B and Leisure sector continues to operate with caution. The sector faces higher cost prices and rising staffing costs, which have reduced profitability margins in recent years.

However, households seeking value in their drinking, dining, and leisure habits have driven the expansion of premium quick service restaurants (QSR), grab-and-go outlets, and London-centric casual dining brands throughout 2024. Overall, operator expansion levels have remained modest, largely in line with 2023.

Further cost pressures are expected in 2025 due to national insurance increases and the removal of rates support that had been in place since the COVID-19 pandemic. While operators will try to limit the impact on price levels for customers, some inflation is likely to be passed on to consumers.