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2022 – The six themes to define retail property’s post Covid reset

4 October, 2021
2021 has been a year of two halves – the first dominated by Covid lockdowns, store closures, rent wrangling and business failures, but in the latter half UK Retail started the long process of piecing itself back together. Now, as 2022 beckons, retailers, landlords and agents alike are taking stock and looking to the future.

Despite the lingering uncertainty created by Omicron, many are eager to capitalise on the natural reset that often accompanies the start of a new year. Strategies are being drawn up to seize on 2022 as the year for exploring new directions and opportunities, not only for future stability, but also for growth.

Here at MMX, we’ve been pouring over the emerging retail property trends and have distilled these down into six key themes that we anticipate will shape the industry over the course of 2022 and beyond:

Shopping centres:

UK shopping centres are experiencing a marked shift in emphasis. With the loss of full-line Debenhams stores in May and the continued pressure more generally on the department store concept, the hunt is on to find creative new uses for vast and often under-utilised anchor units. We anticipate that many of these new uses will start to be delivered in 2022, helping to reshape and refresh the look and feel of shopping centres up and down the UK.

As demand for larger units remains scarce, many of these anchor stores will be repurposed and split into smaller units. This will enable landlords and letting agents to meet an anticipated rise in demand for medium-sized stores, led by emerging new entrants and – in time as confidence starts to return – the national retailer market, who will look for space to test new concepts and formats.

Landlords and agents will also increasingly need to think outside the box when it comes to finding tenants with expansionary aspirations – looking to the leisure and services sectors, such as F&B operators, soft-play providers, gaming, entertainment and experiential concepts, medical practitioners, and serviced office businesses.

Meanwhile, smaller units are already started to see an uptick in demand, thanks largely to localised operators seeking to capture higher footfall and greater access to their local communities. This will continue unabated in 2022 and will shift the focus of malls to become urban centres, offering a wider range of uses to better meet the diverse needs of their local communities.

Demonstrating these trends in action, at the Grafton Centre in Cambridge Legal & General has agreed a deal with serviced office provider x+why to take 15,000 sq ft of space, which will help to manufacture additional footfall and regular spend at the scheme. In an alternative approach to boost footfall, a vacant Next unit at the Hale Leys shopping centre in Aylesbury has been relet to a local restaurant and rooftop bar concept as well as a soft play and arcade business. Meanwhile, Romulus the property investor that acquired Centre Court Shopping Centre in Wimbledon in April, has kickstarted a regeneration plan for the mall focused on delivering a locally based, mixed-use community hub offer. This includes a new serviced office provision and gym operator Frame.

Many investors are currently tempted to see residential redevelopment as the silver bullet for ailing shopping centres, but we remain firm believers that as shown by the examples above, they can be turned around by implementing a strategy of fast-paced occupier repurposing alongside the rightsizing of stores. With the pursuit of a more locally focused approach to lettings, the ‘clone malls’ of the past – offering an identical line-up of national retailers – can also be avoided, helping to boost footfall and spend.

High streets:

With shoppers now able to spend less time commuting and more time exploring the retail offer on their doorstep, it’s no wonder that localism saw a resurgence in 2020 and 2021. Now, as businesses increasingly adopt a permanent hybrid approach to work, and with the temporary return of work-from-home guidance to mitigate the impact of Omicron, the trend towards more localised shopping shows no sign of slowing in 2022.

The resilience of local high streets and market towns is likely to be given a further boost in 2022 as those retailers able to seek growth reappraise their bricks-and-mortar target locations and follow the footfall, looking more favourably at smaller, local high streets that pre-pandemic would not have featured high on their target lists.

Guildford and Richmond, in southwest London, are clear examples of this and are rapidly becoming familiar locations on most retailers’ requirement lists. Take Guildford – pre-pandemic the town centre was struggling with rising vacancy levels, but today potential tenants are competitively bidding on units that become available. A key reason for this is the town’s affluent catchment and residential focus, which means with increased homeworking it has an enlarged pool of local shoppers with disposable income to spend. Towns and high streets like this, are going to be the ones to watch for 2022.

The main sellers have been institutional funds where the further fall in rental values caused through the pandemic and outward yield shift has meant that these assets in terms of lot size no longer seem fit for purpose in the larger funds as the move to focus on alternative sectors for diversification, growth and more stable returns. The intensive asset- management and repositioning to re-create the value lost is probably a stretch too far for them unless the look to asset managers to assist in delivering a robust turnaround strategy.

However, this has created opportunity for prop Co’s and private investors to buy into areas which would not have normally been achievable as they look to take advantage and deliver a re-purposing strategy or some sensible tenant engineering to re-let and resize occupiers. The shift in value has created capital values on a psf basis at levels we have not seen in ’10-15 years’ and provides real opportunities for redevelopment. This can be demonstrated through the sales in vacant Debenhams stores at capital values of sub £50 psf which in reality you would not be able to build the building for.

Although leases have shifted from the traditional terms and are now more flexible on 3-5 year terms investors are obtaining highly attractive yields and if you buy in what we perceived to be the robust locations then there is certainly opportunity and value to be created.

Retail parks:

With the government committed to delivering 300,000 new homes across the UK each year to tackle the housing crisis, and the rise in ecommerce creating a surge in demand for logistics space, developers will increasingly seek to acquire older retail parks for conversion to residential or logistics uses.

An example of this can be seen in Mayfair Capital’s plans to redevelop the Brunel Retail Park in Reading into a two-unit, 150,000 sq ft logistics scheme. British Land also unveiled a new strategy last month to buy and convert car parks and empty retail centres into urban distribution hubs for online shopping and same-day grocery delivery services. One such project will be the conversion of some of the Thurrock Shopping Park, in Essex, into a logistics hub just off the M25.

Meanwhile, earlier this year Berkeley Group acquired half of Kew Retail Park, in southwest London, with plans to create a new residential scheme, while the Church of England has teame+C13d up with Barratt London and plans to demolish the Catford Island retail park in southeast London, replacing it with 600 homes.

With both residential and logistics uses commanding such high values, this trend will be particularly prevalent inside the M25, but with each change of use that occurs the stock of larger retail units within the capital will be depleted, ramping up competition for remaining space to service the capital.

Alongside this comes a move by a number of traditional big-box operators – such as Ikea, Dobbies, B&Q and Homebase – to trial smaller-format stores in city centres, where they can offer a more convenient experience for their shoppers and tap into new urban demographics and trends.

Food Sector:

The food sector has thrived during the pandemic. We expect this to continue well into 2022 as this sector has been one of the standout performers, providing a necessary service which is and will always be ‘essential retail’.

As an example, our retained clients M&S have an ambition to acquire another 50 food stores in 2022 and the same again for 2023, so there’s little let-up in demand.

The sector has the larger stores to facilitate online fulfilment/click and collect and the smaller convenience shops playing a huge role in obtaining the necessities and day-to-day groceries.

This has led to huge amounts of investor demand and inward investment into the sector which has meant significant yield compression. This is coupled with the fact most operators remain focussed on opening significantly more stores in the coming year where possible, however, space and locations are still hard to find and they come at a premium to secure. The dominant investment has been from the two main protagonists namely Realty Income Corp and Supermarket REIT.


The shock of the Covid-19 lockdowns, subsequent retailer collapses and the rising national vacancy rate, have only exacerbated the downward correction in retail rents that was already underway as a result of larger national retailers scaling back their store portfolios in the face of ecommerce’s rapid growth.

While there is still more downward pressure to come on rents at a national level, pockets of resistance will remain throughout 2022 and beyond. These will be found in locations where landlords and agents can demonstrate continued demand for space and resilient footfall. Due to the work-from-home trend, affluent residential locations (rather than the more traditional prime retail parades) will come out on top, with examples expected to include the likes of the Southside shopping centre in Wandsworth and Wokingham Town Centre.

The end of the government’s moratorium on evictions for unpaid rent during Covid lockdowns, will be another key issue to define 2022. First introduced in April 2020 and currently scheduled to end on 25 March next year, this would enable landlords to recoup any outstanding rent or seek to repossess properties where rent has not been paid, finally resetting the dynamic between landlords and tenants over rent and creating a clear and level playing field for all.


Increasingly the retail property industry is tuning into the green agenda. Last month, hot on the heels of Cop26, the British Retail Consortium unveiled its Retailer/Landlord Net Zero Building Protocol – an industry-led initiative that has the backing of the British Property Federation and the Better Buildings Partnership in assisting UK Retail to achieve net zero emissions by 2040.

With greater incentives to make environmentally friendly upgrades to buildings also supported in the government’s review of business rates this autumn, improving the sustainable credentials of stores and retail schemes is certainly rising up the agenda and will become a key point of action in 2022.

As part of this, the retail property industry will increasingly look to reuse and recycle shop fits and find ways to make stores more energy efficient. This will be encouraged by investors demanding environmental credentials ahead of purchase and positively seeking out greener properties, but also a mutual understanding from occupiers that there is added value in sustainable real estate, with many willing to pay for that.

The ‘Urban Agent’:

With all these shifting trends, new formats and reimagined schemes also comes the need for a fresh and more creative outlook from agents. The days of pure retail and leisure agents are gone.

Instead, the concept of the ‘Urban Agent’ – who is able to take a more holistic, bespoke and community-focused approach to retail development, lettings and management – is becoming ever-more important to help facilitate the changes that will dominate the market over the course of 2022 and beyond.

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