Supermarkets seize chance for land grab

Property crash is boon for ‘big four’ food giants

Britain’s supermarkets
are using the property crash to seize sites for new stores in a land
grab that could redefine the retail sector for years to come.

The
move will consolidate the supermarkets’ stranglehold over the retail
sector and alarm MPs, small businesses and green groups.

Tesco and Asda,
the biggest retailers, are committed to opening 2.5m sq ft of new space
this year, while Sainsbury’s wants to add 2.5m sq ft – 15% of its
floorspace – by March 2011. Morrisons is on track to open 1m sq ft by January 2011.

But
the Observer has learned that all the major supermarkets are scouring
retail parks where tenants have gone out of business, and buying empty
high-street shops and pubs for new stores. Sainsbury’s said recently it
was raising £450m to buy distressed development sites.

Senior
property executives believe local authorities might soon relax
objections to new superstores as rising unemployment and lower yields
from business rates become major concerns. Property companies say they
are in a dilemma over whether to allow supermarkets to buy or lease
land on retail parks for fear of antagonising existing tenants.

Property
insiders say Tesco, in particular, is using intermediaries to buy
boarded-up pubs that already have planning consents before passing them
on to the supermarket giant. The big four supermarkets account for 75%
of the UK’s £120bn grocery spend.

“There seems to be a renewed
space race,” said one leading retail property executive. “There’s a lot
of testing of different small- and medium-sized formats. There’s an
increased investment online and, in some cases, on retail parks.”

Labour
MP Jim Dowd, whose parliamentary small shops group’s report led to a
Competition Commission investigation of supermarkets two years ago,
said: “This is a matter of concern because it strengthens the position
of supermarkets, making it harder for medium-sized stores to enter the
market. And it is a matter of concern that local authorities, when
confronted with derelict sites in these straitened times, are more
likely to grant consent which, normally, would have faced more
scrutiny.”

Gideon Amos, chief executive of the Town & Country
Planning Association, said: “We must be wary of allowing the downturn
to be used as an excuse to abandon the urgent priorities of
sustainability – climate-friendly development, and good quality
planning and design.”