UK Grocery Demand Fuels Pipeline Growth

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The U.K. supermarket development pipeline has surpassed that of shopping centers for the first time ever, underscoring the demand for supermarket space, according to a new report from CBRE. 

Overall, the grocery pipeline in Great Britain has increased by 67 percent since 2007. At 48 million square feet, it now accounts for 42 percent of all shop space in the development pipeline, up from 25 percent in 2010. 

The "big four" -- Tesco, Asda, Sainsbury and Morrisons account for 75 percent of main grocery sales, according to the report.

"Tesco, Sainsbury's and Morrisons have all reduced their new floorspace targets over the last year. However, they are still expanding," Chris Keen, director at CBRE, said in the report. "Waitrose, Marks and Spencer, Aldi and Lidl are still increasing their floorspace requirements and so we don't expect to see a noticeable contraction anytime soon."

The amount of new supermarket space under construction in September was 3.51 million square feet, up by 2.95 million square feet from last March, the report states. 

Although the grocery pipeline has expanded in recent years, the annual net addition to stock remained modest -- because of planning obstacles.  

"Construction activity levels are effectively capped at just 3 to 4 million square feet, resulting in a net addition too limited and too dispersed geographically to have much short term impact on market shares," CBRE reports.