UK retail parks face space shortage as occupancy tightens

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UK retail parks space shortage

Highlights

UK retail park vacancy has dropped to 1.8 percent across 407 million square feet, with British Land reporting 99 percent occupancy in its 1,200-unit portfolio.
New lettings in 2025 numbered 721, below the long-term average of 847, as slow planning and high construction costs constrain new development despite robust demand.
Supermarkets and discount chains increasingly occupy larger spaces, and 91 percent of retailers are renewing leases, creating fierce competition for scarce units amid strong tenant retention.

Vacancy falls as development lags demand

As reported by Financial Times, property advisers say Britain’s retail parks are now operating with minimal spare capacity as slow planning processes and higher construction costs hold back new schemes. Data from Savills shows only 1.8 percent of space is available across the UK’s 407 million square feet of retail parks, while British Land says occupancy across its 1,200-unit portfolio stands at 99 percent.

The tighter market is already affecting activity. Savills says there were 721 new lettings in 2025, below the long-term average of 847, suggesting retailers are finding it harder to secure space even as demand remains firm.

Johnny Rowland, co-head of out-of-town retail at Savills, says retail parks are “effectively full” and argues that securing planning permission for new development is becoming more expensive and time-consuming. He says the limited new supply that does come forward is likely to be made up mainly of small two- or three-unit schemes, typically anchored by food stores.

Retailer strategy shifts and regional imbalances emerge

Demand is being supported by a broader shift in retail strategy as companies refocus on physical stores after years of prioritising online services. Chains including Marks and Spencer and John Lewis are investing in store refurbishments as shoppers continue to value the ability to try, inspect or return goods in person.

Stephen Springham, head of retail insight at Knight Frank, says retailers are going back to basics in a way not seen for several years. He adds that many groups had neglected stores for too long, a problem worsened by the pandemic, and that this damaged performance over time.

The shortage of available units is also changing tenant mix across retail parks. According to Knight Frank and TW Associates, supermarkets and discount chains are taking a growing share of larger spaces, while sellers of bulky goods such as furniture, carpets and electricals are focused more on protecting existing estates.

Home Bargains, The Range, B&M and Mountain Warehouse were among the companies taking the largest share of available space last year. Savills also estimates that 91 percent of retailers are renewing leases, making retail parks one of the stickiest segments in the property market and leaving would-be occupiers dependent on space freed up by failures such as Homebase or Carpetright in 2024.

Regional conditions remain uneven. Property agents say some areas, including Merthyr Tydfil, Penrith and Llanelli, have more space than demand requires, while shortages are particularly acute in inner London locations such as Clapham Junction, Putney, Camden and Chiswick.

Our earlier coverage of the ongoing shrinkage of London’s equity market described how the UK continues to lose listed companies as take-privates and foreign listings outpace new IPOs. We noted that retail investors have increasingly channelled money into speculative, loss-making shares rather than established UK businesses, weakening valuation support and reinforcing the risk that stronger companies may exit the London market.

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