Stores ‘have acres of unused land’

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Published: Monday 5th January 2015 by The News Editor

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Britain’s struggling supermarkets are sitting on more than 1,000 acres of land which they are not currently building on, new figures show.

Property agent CBRE found that while the pipeline of new grocery stores in the UK is 46.61 million square feet, just 2.8 million square feet is being built.

This means that 43.81 million square feet of land is lying empty – either subject to a proposal for a new food store, or with permission already granted.

Figures show store-building work has fallen by 20% compared with a year ago. Britain’s four leading supermarkets – Tesco, Asda, Sainsbury’s and Morrisons – are battling tumbling sales amid a squeeze from discounters Aldi and Lidl.

Retailers have in the past faced accusations that they have been hoarding land which could find other uses such as housing.

But the slow-down in sales and the shift away from a “space race” of more, bigger stores presents them with a challenge about what to do with the building plans they already have in place.

Sainsbury’s said in November that it was taking a £287 million hit to its profits after cancelling a number of new site plans, plus a £341 million writedown on existing stores which were showing little or no profit.

Meanwhile, there is speculation that market leader Tesco will also announce a large write-off on its property. Both firms publish trading updates this week.

Chris Keen, director of supermarket leasing at CBRE, told the Daily Telegraph: “The rapid pre-recession market share growth achieved by the ‘big four’ was largely due to a huge wave of grocery stores released variously by the closure of Somerfield, Kwik Save, Safeway and Netto.

“The ‘big four’ also captured substantial trade from the Co-op.

“It was when these easy gains finally dried up five to six years ago that the big four embarked on a major development push designed to protect market share gains. It is that development push that has now ground to a halt.

“It is too early to say whether we are looking at a hiatus or the onset of an actual long-run decline in UK grocery store development activity. A sea-change in grocery markets is, however, certainly occurring.”

Published: Monday 5th January 2015 by The News Editor

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