The retail sector was among the hardest hit during the COVID-19 pandemic, with lockdowns forcing stores to shut, consumer habits rapidly shifting toward e-commerce, and many well-known brands disappearing from the high street. This led to plummeting rental values, rising vacancies, lease renegotiations, and significant property devaluations. High street footfall dropped drastically, and investment sentiment soured. Headlines declaring that ‘Retail Is Dead’ regularly graced the front pages of our tabloid newspapers.
However, five years on, the outlook is changing. While certain parts of the retail sector remain under pressure, others are proving to be resilient, and some are even thriving. The belief that retail as an investment class is dead is misleading—what we are witnessing instead is a transformation. Investors who understand the new retail landscape are finding opportunities in well-positioned assets that cater to evolving consumer needs.
Why Retail is Not ‘Dead’
The perception that retail has been permanently damaged by the pandemic fails to recognize key shifts in the market that are driving renewed investor interest. Several factors are supporting retail’s recovery and making it an attractive asset class again:
1. Economic Growth and Business Recovery
The UK economy has experienced fluctuations since the pandemic, with a mild recession in late 2023 followed by a strong recovery in early 2024. Despite some stagnation later in 2024, forecasts for 2025 indicate a modest GDP growth rate of 1.2%, providing a cautiously optimistic outlook for commercial property investors (Carter Jonas). This growth is expected to enhance business confidence and drive retail spending. Let’s hope that unintended consequences of the October 2024 budget – higher employment costs and business rates amongst them - don’t derail this.
Some retail locations, in catchments with strong socio-economics – are thriving. Some retail in great locations is actually looking great value at the moment as we are still in a cyclical downturn.
