Investment in properties let to supermarkets showed no sign of waning according to a report commissioned by retail property advisors Angermann, Godard and Loyd.
AGL has this week published research on the supermarket sector predicting future rental growth and continued demand for space from all supermarket operators.
It found investors are still keen to invest in supermarket properties and rental growth across the all sizes of supermarket stores over the last 5 years has been 5.1% a year with the north East the best performing region .
Stores in secondary locations with rents of around £10/ sq ft have shown the best growth.
It also found retailers are prepared to compromise their locations and are taking new space with reduced car parking provision just to continue to expand. There has been a massive drive into convenience stores with less than 3,000 sq ft sales allowing full Sunday trading.
Matthew Bailey, director at Angermann, Godard and Loyd, said: ‘The continued success of the supermarket sector has enabled both Tesco and Sainsbury’s to make disposals in recent weeks at yields below 5.5%. This seems to be one of the few sectors where there is still demand for stock and yields are holding steady.
‘There is no fixed store size anymore. The retailers want to mop up any population areas where they are not represented and will take smaller stores than they would otherwise want in the hope of extending the sales floor at a later date.’
AGL also found that the non food sector voiced concern by that the expanding range of goods now offered by the supermarkets which were directly impacting on their own sales.
‘This has been demonstrated over the Christmas sales period with the main supermarket retailers all reporting good sales growth whilst traditional retail warehouse operators have had a much tougher time.’ added Bailey.
AGL also found that the dominance of Tesco is highlighted by the fact that of the 121 major postcode areas in the UK, Tesco was the dominant supermarket in 81 of the areas and of the remaining 40 they are in second place in 24.
The research was conducted by Moran Research and Consultancy on behalf of Angermann, Godard and Loyd, and included interviews with seven major supermarkets and 30 non-food retailers.