Retail parks in the UK are running out of space, property advisers warned this week. Demand from discount grocers and essential retailers has outpaced supply, leaving few vacancies for new tenants.
A report from Savills showed that 91% of retailers are renewing leases, leaving little available stock. The firm described the sector as “effectively full,” with letting activity limited by a lack of new space rather than weak demand.
Savills recorded 721 lettings in 2025, below the long-term average of 847, despite a challenging trading environment. The shortage stems from scarce land, rising construction costs, and strong tenant reliability, which have made retail parks one of the most stable segments in commercial property.
Johnny Rowland, co-head of out-of-town retail at Savills, said the market faces a persistent imbalance between supply and demand. “Securing space now requires early engagement or waiting for rare lease events,” he stated.
Competition for well-located units has driven up rents. Landlords now prefer tenants with strong credit ratings, reducing vacancy risks.
The sector’s strength comes from its evolving tenant base. Once dominated by furniture and electronics stores, retail parks now favor grocery, discount, and value-focused operators. Aldi and Lidl have led this expansion, reshaping the market over the past decade.
Sam Arrowsmith, commercial research director at Savills, said the change has increased demand while tightening supply. “Discount grocery and variety retailers have expanded significantly,” he explained. “This move toward essential and value-driven uses has improved retention and created a more stable, supply-constrained market.”
Traditional big-box retailers have lost ground. Some have downsized or moved to smaller units, while others have left the sector entirely.
The imbalance shows no signs of easing. With land scarce and build costs high, developers are reluctant to start new projects. Retailers must act quickly when space opens, often paying a premium.
Lease negotiations have become more competitive. Landlords, confident in the sector’s stability, offer fewer incentives, while tenants must move fast to secure deals.
The shortage has also made retail parks more uniform. Grocery and discount chains now dominate, leaving little room for independent or niche operators. This has reduced tenant variety across the sector.
Performance remains strong. Occupancy rates are high, and rents have stayed steady, even as other retail segments struggle. The main challenge is no longer filling space—it’s finding enough of it.
Some retailers have adapted by launching smaller formats. New concepts allow businesses to operate in tighter spaces while maintaining brand presence.
Others have turned to sustainable packaging to cut costs. Aluminium cans and glass bottles are becoming more common as companies seek efficiency in logistics and storage.
