Retail Construction: A Bright Spot for Growth in 2025

The retail sector is likely to provide one of the more reliable sources of new work for the construction industry both in the year ahead and in 2026.

Despite current economic challenges, the prospect of further real wage rises, and lower interest rates should support consumer spending as the year progresses and encourage retailers to invest in their estates.

Expansion by the budget supermarket retailers, refurbishments of shopping centres, and investment in new retail parks and warehouses should all help to support building activity in the sector.

After a 14% increase in the value of underlying retail project starts last year, the recently published Glenigan Construction Industry Forecast 2025-2026 predicts a further 1% rise in starts in the sector this year followed by stronger, 9% growth in the following year.

Significant supermarkets

Aldi stands out as one of the most significant developers in the sector. Before Christmas, the budget retailer unveiled plans to invest around £650 million across the country this year. The programme will include new stores in Fulham Broadway, Billericay, and Cheadle in Stoke-on-Trent with an overall target of 30 new store openings this year.

In London alone, Aldi plans to open nine new stores this year as part of a long-term goal to open another 100 stores in the Capital.

Glenigan data gives details on numerous new Aldi construction projects in the pipeline. For example, detailed plans have been submitted for a new £3.3 million store refurbishment for the chain in Chesterfield where work is due to start this summer and run for seven months. (Project ID: 24222465).

Lidl is also expanding its footprint and creating new construction contracts. The retailer has recently signed a joint venture property deal worth £70 million which involves 12 new stores in locations including Crediton in Devon, Manchester, and Saffron Walden in Essex. Having opened ten new stores before Christmas, a further three existing stores are set to reopen after upgrades and extensions.

One Lidl Supermarket project where detailed plans have recently been submitted is a new £3.97 million store in Chorley, Lancashire. Work on the scheme, which is at the pre-tender stage and involves a floor area of almost 2,000 sq m, is set to start in July and run for seven months (Project ID: 21426627).

The growth of retail parks around towns and cities is another promising source of new work for contractors. Recent research from Savills highlights the popularity of retail parks with value chains such as The Range and Poundland as well as convenience food stores, as a key factor in the success of these sites across Europe.

One retail park scheme which has yet to go out to tender is a £12.2 million redevelopment of St George’s Park at Newport on the Isle of Wight (pictured). It involves six retail units across a floor area of over 6,500 sq m. Work on the scheme is due to start this coming spring and run for nine months (Project ID: 13234631).

Modernising shopping centres

Investment by the major quoted property groups to modernise and redevelop shopping centres is another source of new contracts.

Landsec, which recently increased its stake in the Bluewater Shopping Centre, says it is continuing to see growing demand for physical retail space in the very best locations.

It is investing across its retail portfolio with a new £15 million food & beverage expansion at Trinity, Leeds (Project ID: 24246539) and a new waterfront food & beverage offer at Gunwharf Quays in Portsmouth. In all, the group plans to make a capital expenditure of £100 million in the sector over the next 2-3 years.

Faced with strong demand for retail space, Landsec has recently changed its plans for Buchanan Galleries, a flagship scheme on Glasgow’s prime high street. Rather than the decade-long, office-led regeneration scheme which it had planned, the group is now going ahead with a faster redevelopment of the existing retail centre, creating a new food hall and opening up the existing building to the high street (Project ID: 06499796).