Out-of-Town Retail Strengthens as Retail Parks Drive Commercial Property Performance
Out-of-town retail has continued to outperform the wider UK retail market throughout 2025, reinforcing its position as one of the most resilient segments within commercial property.
According to SHW’s Q1 2026 Retail Focus report, retail warehousing has been the standout performer, supported by low vacancy rates, limited new supply and sustained occupier demand.
For contractors delivering full retail fit-outs and refurbishment schemes, the data points to continued pipeline activity across retail parks and solus units nationwide. Rental growth has been recorded across the year, underpinned by vacancy rates holding at around 5 per cent.
Despite a slight softening compared with 2024, investment volumes remained robust, with more than £2 billion transacted in 2025. This aligns closely with the sector’s 10-year average, with returns over the past 12 months averaging 9.8 per cent.
Investor appetite has focused on well-located secondary assets offering strong income returns. Groups including Redevco and Realty Income have been active in targeting these opportunities, reflecting confidence in the sector’s long-term fundamentals.
Occupational demand has remained resilient.
Space released following the administrations of Homebase and Carpetright was rapidly absorbed by food retailers, DIY operators, discount brands and gym operators. There has also been an increase in retailers acquiring freehold interests in standalone units to secure long-term occupation beyond lease expiry.
Letting activity continues to vary by location and scheme type. Operators such as Next, Superdrug and Marks & Spencer Food have targeted schemes with a stronger high-street bias, while discount brands including Home Bargains and B&M have continued to expand across retail park locations.
Although a limited number of store closures have been announced by Hobbycraft, overall supply remains tight. Gym operators are increasingly competing with traditional retailers for available space, bringing new customer demographics to retail parks and strengthening footfall.
Within the grocery sector, Christmas trading was generally positive. Lidl and Aldi reported strong sales growth, with Lidl now recognised as the UK’s fastest-growing bricks-and-mortar supermarket. Most other major grocers also recorded uplifts.
The food and beverage and quick-service restaurant segment has remained active, particularly in the drive-through market where competition for sites is intensifying. Units vacated following closures by Pizza Hut were quickly re-let, while fried chicken and coffee brands continue to expand.
For contractors specialising in full retail fit-outs, refurbishment and M&E upgrades, sustained investment activity, low vacancy levels and ongoing occupier churn across retail warehousing suggest continued opportunity across the out-of-town sector into 2026.