Retail park sales growth has eclipsed in-town performance and has encouraged more leisure operators to expand their out-of-town locations.

Cinemas and restaurants are enhancing the offer at retail parks

Few shoppers now find themselves at a retail park with little more than a burger van, although it wasn’t so long ago that a hot cup of tea and a chip butty passed for the food and beverage provision at many out-of-town sites.

The transformation from locations selling bulky goods to a softer environment filled with homewares and fashion retailers has helped the leisure provision improve at most retail parks. Restaurants, cinemas and even gyms are now common fixtures.

Exclusive research, carried out for Retail Week by retail research firm Trevor Wood Associates, found that nearly half of the UK’s 964 out-of-town retail and shopping parks and mixed retail and leisure sites now have a coffee bar, restaurant, fast food outlet, pub or takeaway, with the most common tenants being Burger King, Costa Coffee, Frankie & Benny’s, KFC, McDonald’s and Pizza Hut. Other widely found tenants include Domino’s Pizza, Nando’s, Starbucks and Subway. In larger schemes, leisure operators tend to be clustered in groups of up to five or six.

Of all UK retail parks, 29 have a cinema as part of the scheme - which is a major draw in itself for the food and beverage brands - 24 have a bowling alley and 88 incorporate a health and fitness centre. Many other parks are near to freestanding leisure developments containing such outlets. These have not been counted in the Trevor Wood research.

Two examples are Silverlink Shopping Park in North Shields, which is immediately next to Silverlink Leisure ark. Silverlink has a nine-screen Odeon cinema, while Avon Meads Retail Park in Bristol, which is next to Avon Meads Leisure Park, has a 14-screen Showcase Cinemas and a Hollywood Bowl.

While leisure is becoming an increasingly important factor, Retail Week’s research, extrapolated from Trevor Wood’s forthcoming Definitive Guide to Retail & Leisure Parks 2013, shows there is still significant potential for leisure development at many parks.

David Bell, director of leisure at property agent Savills, says: “Leisure is more important than ever, especially with the proliferation of open A1 parks, which attract the softer retailers and tend to benefit more from the additional dwell time achieved from cinemas and restaurants.”

In the move to convert from bulky goods parks to an offer more akin to a shopping centre, many parks have gone through transformations. Landlords have started to create a complementary tenant mix by making space more adaptable, which in turn has improved the environment by adding facilities that were previously difficult to offer at an outdoor site.

John Maddison, head of retail warehouse asset management at landlord British Land, says: “With the change in tenant mix, retail parks have become nicer environments and there are better facilities to reflect the different customer base.”

British Land has embarked on a programme of park asset management projects to boost the leisure element which, in turn, Maddison says, improves the overall environment. “There is no doubt that a leisure offer not only increases dwell time but gives customers somewhere to rest and relax, and provides services such as toilets, which are difficult to provide in an open park setting.”

He points to the Queens Retail Park in Stafford as an example of where British Land has worked with tenants to help resolve such issues. “We paid for larger toilets to be installed at the new Costa Coffee and for the space it took up, but Costa is now managing those for us,” he says.

In Cardiff, retail property management firm Pradera worked with the local authority to help bolster links and services at the Cardiff Gate Retail Park to support the surrounding community. Neil Varnham, managing director of Pradera, explains: “We introduced a supermarket and a gym, which both bring a different dynamic.

“In terms of the gym, we have put it on the first floor, making use of ‘air space’. We may well add a cinema operator at some point in the future. The important thing is that they all keep the centre alive outside of shopping hours.”

Drawing in the crowds

A leisure anchor, such as a cinema, is a significant draw when trying to create a strong food and beverage offer that will keep a park busy into the evening. Adam Patrick, partner at property management firm Edgerley Simpson Howe, adds: “They [food and drink operators] will often need more persuasion regarding taking a unit without a cinema or leisure anchor in place.

“Retail parks are still quite a new market for restaurant operators and they feel comfortable with cinemas especially, because it’s a model they know and understand. They also like a bit of scale, perhaps five or six units together.” He adds that some parks include a gym, but says this is a very different offer from a cinema.

“People tend to travel to gyms alone and with a task that doesn’t necessarily lend itself to then eating out,” he says.

Big cinema operators Vue, Cineworld and Odeon are all prepared to move onto retail parks, says Bell, but they will pick their locations carefully. Meanwhile, the restaurant groups prefer to be among a mix of retail and leisure. “There is also a changing dynamic,” Bell says. “There was a time when children’s play operators were very popular but this has reduced. Bingo has had a difficult time too, while gyms are not always complementary, although there is some demand for budget gym operators located on the first floor of schemes. It really is cinemas that draw in the other leisure operators.”

This is borne out by a raft of new schemes such as Glasgow Fort, where British Land has pre-signed cinema operator Vue and has TGI Friday’s, Chiquito, Prezzo and Harvester opening as part of the redevelopment, with handover scheduled for September 2013 and pre-Christmas trading. At Broughton Shopping Park in Chester, Cineworld has been signed as the cinema operator and Chiquito, Pizza Express, Frankie & Benny’s, Nando’s and Harvester as the food and beverage providers.

Finally, at the Fort Kinnaird Shopping Park in Edinburgh, the Northern Quarter extension will include Debenhams as its anchor, plus a cinema and seven restaurants occupying a combined 27,500 sq ft. It is scheduled for an autumn 2014 opening.

Edinburgh’s Fort Kinnaird plans to extend with a Debenhams anchor, restaurants and a cinema

Edinburgh’s Fort Kinnaird plans to extend with a Debenhams anchor, restaurants and a cinema

While Maddison agrees that leisure operators do favour a cinema, he believes that many brands are becoming more confident about the potential of retail parks.

Confidence boost

The retail park market appears to be growing in confidence. Buoyed by the lack of new shopping centre development, problems on many high streets and by greater readiness among traditional retailers to consider
out-of-town formats, the parks are increasing in diversity.

Maddison says British Land has been asset-managing its retail park portfolio “very aggressively”. He points to Westside Retail Park in Leeds, where British Land replaced a Focus DIY store with an Asda Living and a Costa Coffee drive-through. “By our reckonings, Asda alone increased footfall by 10% and the Costa has increased car flow by another 6%,” he says.

“At the Gallagher Retail Park in Cheltenham, we introduced the first Whole Foods Market, which has added 9%to footfall, so our view is that doing the right things can see some real footfall improvements,” he says.

Richard Gore, property director of Pradera, says retail parks are comparatively easy to reconfigure to meet changing requirements for either traditional retailers or new leisure offers. “Chopping and changing a park is relatively straightforward compared with a shopping centre,” he says. “With the massive changes going on in retail, parks are quite adaptable and we can combine or break up units, organise the parking for click-and-collect and experiment with new features like Amazon lockers.”

Patrick says a greater diversity of retailers are also taking a fresh look at retail parks and actively seeking to expand their out-of-town store portfolios. “Marks & Spencer and Debenhams are becoming increasingly active, helped by the fact that planning is more favourable because of the onus on job creation,” he explains. “On the flip side, the changing profile of grocery growth means that the emphasis is more on convenience than the larger out-of-town sites. That said a late opening grocery store is another good draw for restaurant operators.”

There is also demand from retailers including Dunelm Mill, The Range and Go Outdoors, and Next has changed strategy to target larger stores, ideally with a full mezzanine. This is positive for retail parks although Patrick adds that all retailers are still being selective. “We are not talking about a lot of stores,” he acknowledges.

Restaurants and retailers are taking units in out-of-town retail parks

Restaurants and retailers are taking units in out-of-town retail parks

As retail parks pique the interest of more retailers and leisure operators than ever before, Varnham describes the demand for space as “both deep and diverse” and predicts a low void rate for this year and, possibly, modest rental growth. Meaning 2013 looks like a year with strong prospects for both retail parks and their visitors.

UK schemes with more than 10 leisure units

The Brewery, Romford

The Brewery, Romford

  • The Brewery, Romford
  • Glasgow Fort Shopping Park, Glasgow
  • Middlebrook Retail & Leisure Park, Bolton
  • Two Rivers Retail Park, Staines
  • Ocean Plaza Shopping Park, Southport

Source: Trevor Wood Associates

Leisure: beyond cinemas and food and beverage

Harvester

Harvester

While the majority of growth in leisure at retail parks has involved boosting the food and beverage offer, a number of other sectors have started to show interest in such locations.

David Bell, leisure director for Savills, says: “Budget hotels are another area of potential growth for retail parks, in particular Premier Inn, which has a strong covenant and is a very well-run operation. The group will take park sites, although it tends to opt for locations very close or adjacent to a retail park, rather than on the park site itself.”

Pubs with a strong food offer have also become attractive tenants, although this can be slightly more complicated. Pradera managing director Neil Varnham notes: “Harvester and Toby Inns have shown interest in retail parks but the main issue with any sort of bar is the nuisance factor. That said, retail parks have the advantage of being out of town and brands like Harvester are oriented towards the family market and business users.”