Mat Oakley, head of commercial research at Savills, said: “While the total returns from retail warehousing have been hit by a double whammy of softening yields and falling rental growth, we now believe that the sector will witness an end to its pricing correction following a 25bp yield shift in Q1 of 2008.”

Retail park owners have reacted to the tougher market conditions by improving the quality of their existing assets, and their prime objective has been to maintain occupancy levels even at the expense of rental growth, according to Martin Supple, Savills’ head of out of town retail. “Voids have a negative impact on tenants and landlords alike,” he said. “And, in the current retail market, we have learned that a fully let park is to the mutual benefit of both landlord and tenant. Parks with more fascias will generate greater footfall, which in turn, drives retail performance, therefore leading to increased demand.”

In the occupational market Savills’ research found that a number of retailers are continuing to expand their store portfolios, particularly Currys, ScS, Land of Leather, Maplin and Laura Ashley. There has also been some new entrants to the market including Irish retailer Smyths Toys.

However, the traditional retailer’s size requirements have continued to shrink, a trend set by the bulky and open A1 retailers a few years ago. B&Q in particular has reduced its size criteria from 100,000 sq ft to focus on its Mini-Warehouse format of around 50,000 sq ft. Currys has also considerably reduced its format with stores now ranging between 10,000 sq ft and 15,000 sq ft.

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