The Grocer: In the retail space race, UK supermarkets are keeping up the pace

Tesco may have called a halt to the supermarket space race - but no one else is listening.

Property analyst Glenigan has revealed that far from slowing down, supermarket spending on new project starts in Q1 2012 was £106m higher than in Q1 2011, up 37% year-on-year.

And in another surprising finding, the statistics show new builds are the most popular, despite previous trends pointing towards cheaper extensions or refurbishments. Spending on new builds leapt up £139m, while extensions went down £34m. Refurbishments hovered around the same level, going up by just £2m.

“Since reaching its lowest point in 2009, retail construction has staged a recovery,” said Glenigan economics director Allan Wilen.

“Fuelling much of this growth was the big supermarket chains, Sainsbury’s in particular. In addition, the rise in retail projects was buoyed during the quarter by several shopping centre and town centre redevelopment schemes that included supermarkets as anchor stores for the development.”

Wilen added that Tesco’s withdrawal from the space race hasn’t filtered through to the ground just yet - and predicted that the next three quarters would be equally strong as retailers continued to defy the economic conditions.

“The high-profile announcement by Tesco to abandon its store expansion plans has not yet slowed the pace of construction in the sector,” he said.

“2012 is set to continue to be a strong year for retail construction. We are predicting that the sector will end the year 35% up on 2011.”

Read the article on The Grocer website