Is M&S signalling a structural shift in property strategy?

Mainstream retailers are increasingly treading on the discounters’ turf – and it appears that out-of-town retail parks are now the prime battleground. Few recent examples demonstrate this as clearly as Marks & Spencer’s strategy, which is pivoting its food hall rollout toward retail park sites in order to compete directly with Aldi and Lidl.

The data in the retail property market tells its own story. At the end of 2024, British Land reported its retail park portfolio was 99% let, with nationwide vacancy rates at just 5% to 6%, compared with approximately 14% on high streets and 17–18% in shopping centres.

Finding suitable space is a hurdle for expanding retailers. Limited new supply and high demand are keeping rental values firm, while operators on high streets remain under pressure.

CBRE’s latest UK Retail Parks 2025 report reinforces this: retail parks are showing “exceptional resilience”, with foot traffic surpassing that of high streets and shopping centres – evidence of sustained consumer preference for convenience-led, value-driven retail formats.

The report also highlights that retail park vacancy has tightened significantly, now down to 6%, underscoring robust occupier demand. The first half of 2025 alone saw a 32% year-on-year surge in investment in UK retail warehouses – totalling £1.5bn – demonstrating strong investor conviction in the format’s growth potential.

According to the BRC, retail parks were the only retail format to record net store growth in 2024, with openings exceeding closures by around 0.4%, while high streets and shopping centres continued to contract. In May 2025, retail park footfall increased by 0.2% year-on-year, while high streets and shopping centres declined by 2% to 3%.

Shoppers are increasingly drawn to retail parks for their ease of access, free parking, store size and the ability to combine shopping with click-and-collect or leisure activities. Post-pandemic, the open-air format and suburban locations have also added to their appeal.

Investor sentiment has matched the demand. In 2024, retail park investment grew substantially – £2.4bn in deals, roughly 30% higher than 2023 levels. Savills reported a 14% year-on-year increase, with particularly strong activity in the Midlands, North West and Scotland.

One of the major drivers for this was REITs such as Reality Income which has, since entering the market in 2019, become one of the largest retail park owners in the UK.

Other institutional investors – previously hesitant – are now returning, drawn to assets anchored by grocery, value and leisure occupiers. Yields are tightening, competition for assets is fierce and landlords are curating tenant mixes more aggressively to drive returns.

Against this backdrop, M&S’s property pivot is telling. Known for its high street heritage, the retailer is now actively targeting out-of-town spaces for its food halls – taking direct aim at Aldi and Lidl in their own arenas. They have also announced plans to open stores at 12 former Homebase sites, repurposing retail parks to meet evolving consumer needs.

This shift aligns with broader trends: Ikea is repurposing former Homebase sites for smaller-format branches; Superdrug now operates 89 retail park units; PureGym continues to expand across retail warehouse units; and supermarkets, particularly Lidl and Aldi, have been aggressively snapping up out-of-town real estate for the past three years.

For landlords, the flood of retailers eyeing retail parks has created a hyper-competitive leasing environment. Agents must act swiftly to meet retailer needs; for retailers, inaction means being left out of the most resilient format in the market.

Occupancy rates are high, supply is limited and deals are being struck at speed. At GRO Retail’s April event, the urgency was palpable.

Retail property is undergoing a structural rebalancing. While high streets still matter, momentum lies with retail parks.

The real question for retailers isn’t whether to engage but how quickly they can secure space. For property stakeholders, the challenge lies in unlocking opportunities in a market defined by constrained supply and surging demand.