LEISURE groups and American chains such as Victoria’s Secret are set to help fill a million square feet of retail space being built in Scotland’s cities, according to a report by property experts Colliers.
The firm’s midsummer retail report said the big shopping centres will soon return to rental price growth, although secondary areas are still struggling.
Colliers said it has been involved in negotiations with US chains American Eagle, David’s Bridal and Victoria’s Secret, which are all looking for a first Scottish foothold.
John Duffy, director of town retail at Colliers in Scotland, said Glasgow is a logical next step for foreign retailers who have established themselves in London. Edinburgh outlets often follow.
“There’s enough spend here that it interests them,” he said.
The midsummer report found that new entrants to the Scottish market were one of the bright points for landlords in a year when rents stabilised but still failed to grow.
Almost three-quarters of shopping centres experienced stable rents, while retailers became less demanding about the incentives they required in order to sign a lease. In the buyers’ market following the financial crisis, rent-free periods of up to 18 months had commonly been secured as a condition of opening a shop.
Overall retail rents slipped 0.7 per cent during the last 12 months. Colliers said it expects larger shopping centres to return to rental growth this year.
Duffy said most of Scotland’s high streets remain “over- supplied”, with smaller shopping towns struggling to compete with internet sellers and bigger destinations. Converting shops into other businesses or even into residential property is being considered in some of the “losing” towns.
At the same time, the redevelopments of Edinburgh’s St James Centre and Glasgow’s Buchanan Galleries will add around one million square feet of retail space by the end of the decade.
Chris Humphrey, Colliers’ director of out-of-town in Scotland, said it was questionable whether the two cities needed so much additional retail space, as shopping centres are increasingly looking to leisure firms rather than retailers to fill space.
Many include a cinema, while the proportion of cafes and restaurants to shops has increased markedly as the big centres re-invent themselves as all-round leisure destinations.
Colliers also recently published research on the impact of the forthcoming referendum on commercial property markets north of the Border.
It concluded that while there was evidence of a lull ahead of the vote, as buyers and potential leaseholders remained cautious, the sector faced a “win-win” scenario as either result would unleash some of the pent-up potential.