Demand for retail units, particularly in Oxford city centre and Oxfordshire’s market towns, has been steadily increasing over the last two years.
Martin Conway, a partner at Marriotts Oxford – one of 21 commercial property firms which contributes data to the Oxfordshire commercial property ‘dashboard’ compiled quarterly – said the challenge for landlords is not necessarily finding a tenant, but rather selecting the right tenant.
“With renewed economic growth and confidence, comes the inevitable surge in the number of new businesses starting up,” explained Mr Conway. “This is particularly true in the food and drink sector, where demand for premises for cafes, bars, restaurants and take away food outlets in the centre of Oxford and other prime locations is very high. It can be difficult for landlords to identify good, long-term tenants among those starting out, many of whom don’t yet have a proven track record.
“We are also seeing an increasing level of enquiries from national chains, such as Domino’s Pizza which we recently secured as tenants for an 880 sq ft unit in Wallingford. A Planning Change of Use is sometimes required, but this doesn’t seem to be putting off prospective occupiers – and it certainly didn’t in the case of Domino’s who were prepared to jump through multiple planning hoops to secure the right property.
“Charities also continue to be interested in vacant units in city centre or high street locations. Whilst sometimes their presence is not seen as adding to the vitality of shopping locations they usually offer landlords a secure responsible tenant.”
While the size, type and condition of each property together with its location will ultimately determine its popularity, Mr Conway says his firm has seen the greatest demand for smaller to medium shops, typically between 400 and 1,000 sq ft with annual rentals of £20k to £50k.
Out-of-town development is now being driven by the discount retailers such as Aldi and Lidl whilst the appetite for larger superstores by the mainstream supermarkets operators has waned.
“Rental prices have remained reasonably steady in Oxfordshire after recovering from the lull in 2008-9, but there are signs that they may start to rise, particularly if demand continues to escalate,” said Mr Conway. “Retail is generally an attractive option for investors but with so few freehold opportunities available, particularly in city centre or high street locations, there are few opportunities to buy. Any out-of-town development is being driven by the large discount retailers.”