Rise in Grab & Go food retailers has driven rental growth, says research
According to research by Colliers International.
Global Real Estate agents Colliers International’s research into the ‘Grab & Go’ food and drink sector has revealed a strong relationship between the increase in the numbers of operators in prime London pitches and the growth in top rents in those locations during the same period.
The strength of demand from ‘Grab & Go’ chains such as Costa Coffee, Caffé Nero, Starbucks plus smaller independent coffee houses on the busiest retail pitches in London has resulted in a gap opening up between the level of bidding for A1 food uses compared to other A1 retail uses made them increasingly competitive when securing stores that would have normally been the home of ‘conventional’ retail offers.
The research reviews the number of outlets and rental levels for operators in 14 central London pitches between June 2014 and June 2016. It shows that Baker Street and Camden High Street have seen more than 30 per cent growth in the number of ‘Grab & Go’ outlets in the past two years while top rents in those locations have increased by over 20 per cent during the same period.
David Carlsson, Director in Colliers International’s Central London Retail Agency team, said: “Our research shows that, in locations where ‘Grab & Go’ demand exceeds that from other retail concepts, there is clear evidence of a rental differential because food operators are willing to pay more than others to occupy these units.
“The rise of the coffee house in the UK has been a phenomenon, and shows no signs of slowing down any time soon. In 2000, there were 193 Costa outlets in the UK, and by 2010 this had grown to over 1,000 – equating to approximately eight new openings every month for the decade.”
The research also shows that although landlords are attracted to the larger ‘Grab & Go’ chains because of their business solidity and ability to pay rents, they are also realising that today’s customers are looking for more diversity and choice. This is resulting in more independent coffee houses popping up in prime pitches throughout Central London, albeit in smaller or kiosk-style units.
Carlsson said: “As this relatively young market matures, we are starting to see more differentiation of brands to serve more specific customer groups. A good example of this is ‘Veggie Pret’ which has been trialled successfully in Soho is likely to be opening up elsewhere in central London.
“We’re also seeing some ‘Grab & Go’ concepts operating from kiosks or much smaller units in order to secure a presence in the busiest, most competitive locations. Landlords are now more flexible and will balance covenant strength with a diversified offer.”
