Chief Executive's Blog: The End of the Space Race

A couple of interesting statistics have come to light in the past week that are relevant to ACS’s long running campaign on effective town centre first planning policy. The first was broadcast as part of a Dispatches programme that aired last week on the fate of the big four supermarkets. They commissioned Glenigans to look at what had happened to supermarkets' plans to invest in new stores. It found that ¼ of all planned large supermarkets, including discount stores, have been put on hold or cancelled – with Tesco in particular having halted nearly half of all the stores it had planning permission to build (around 60 stores).

This has been followed up by the incredibly useful report published this morning by CBRE into the grocery outlet pipeline. It shows for the first time in a while a decrease in the amount of new grocery stores in the pipeline (either planned, with planning permission or under construction.) Many will say this is simply confirmation of a commercial strategy that the supermarkets have signalled for quite some time.

However, we should not get carried away with a sense that the era of the out of town supermarket is over. It may have dipped a little but the CBRE report shows that the pipeline of new grocery stores still totals more than 47.6m square feet of new floor space.

It seems counter intuitive that companies that are doubting the value of continued investment in new large format stores and extensions would continue to pursue such a significant amount of new development, but they clearly are. It seems like a paranoid fervour remains that makes companies conclude that they must pursue development even if they don’t plan to use it for fear that someone else might.

Of this development pipeline nearly 30 million square feet has been given planning consent. Local authorities continue to be seduced by the idea of big new developments, outlandish job claims and lucrative sounding planning gain negotiations.

The town centre implications of all this are pretty depressing. Of the 30 million square feet of new retail floor space that has been approved for development, more than 25 million square feet (83%) is for out of town supermarkets, and the trend is moving rapidly in the wrong direction. ACS has long campaigned for Government and Councils to take the commitment to ‘town centre first’ seriously, but these figures reinforce our own research that suggests that the planning system is increasingly rudderless.

It is this next statistic that makes the grimmest reading of all though. Of the 25 million square feet of new out-of-town grocery store development that has planning approval only 7% is actually under construction and this percentage falls year on year.

So we seem to have the worst of all worlds. Millions of square feet of retail floor space with planning approval siting outside our town centres, acting as a deterrent to any serious investors in the local centre and yet no real intention on part of the developer to actually build the store for which they have planning approval. Perhaps small stores should be celebrating the non-building of these stores. Government, however, should be profoundly concerned about what this means for sustained economic growth.

The ‘space race’ appears to have become a cold war and it’s one that nobody is winning.

This entry was posted by Chris on Tue, 05/08/2014 - 09:00