Construction orders decline as retailers look to sweat their assets and maximise efficiency of available space

Retailers remain under significant pressure regarding the persistent challenges of rising costs, placing maximum pressure on owner/occupiers with some forecasts of significant store closures and as many as 200,000 job losses in 2026.

A fine balancing act between passing on cost to the consumer and cost absorption and procurement efficiencies has yet to play out fully, but this is already feeding through to reduced construction orders from retail operators in Q3 2025/26.

Convenience in all formats continues to be a popular divergence for all major food retailers where price and profitability are less pressured with saturation yet to be reached. Retail parks continue to provide strong financial rental performance, and this is driving investors to sweat their assets, transforming underperforming sites, while maximising use of all available space with additional pop-up and drive-thru conversions improving investment and cost efficiency.

Hospitality traditionally presents a counter-cyclical opportunity. This largely mirrors retailers re-evaluating requirements with a move toward more cost-effective formats amid rising operating costs, following rises in business rates, National Insurance and the minimum wage.

Vacancy rates have improved creating a relative resurgence as prime retail locations continue to be in demand by big brands. With capital availability improving, investors are returning to out-of-town shopping centres and food stores. This trend continues to see increased repurposing of existing retail spaces into smaller, more flexible units that can serve multiple tenants or purposes.