The Retail Note - Retail Renaissance 2026: Tough at the Top

Key Messages

• The days of exponential online growth are over
• Online penetration continually hovering around the 26-28% mark
• Online subject to exceptional seasonal peaks and troughs
• Multi-channel growing at a much faster rate than pure-play
• Multi-channel operators now at scale with their online infrastructure
• Freeing up capex to re-invest into their store portfolios
• Growing evidence of retailers ‘going back to basics’
• Heavy investment in refurbs and store upgrades, as much as expansion
• M&S (£300m in 2025), John Lewis (£800m over 4 years) prime examples
• Slowly reversing a long period of neglect
• Seemingly positive RWH metrics actually a cause for concern
• RWH vacancy levels at record lows (4.7%)
• Supply is static (at ca. 200m sq ft)
• The development pipeline is very limited (max. 2.4m sq ft to 2033)
• Occupier demand is broad and deep (7.5m sq ft absorbed in 2025)
• Renewed interest in Regional Shopping Centres (RSCs)
• Key intu schemes coming to the market inc. Merry Hill, Metrocentre
• intu a corporate failure, rather than reflection of the assets themselves
• Recent acquisitions point to a more diversified ownership base
• Willing, proactive and committed owners, rather than passive ones
• Significant U-turn on the part of institutional investors re the high st
• Investment strategies employing a different playbook than before
• …less property-centric and geographically-blinkered…
• …and more aligned to retail occupational markets
• Business rates remain a major burden on retail and hospitality markets
• ‘Levelling the playing field’ exceptionally complex and unworkable
• Current system is broken and in need of total reform.

Retail – Tough at the Top. An unlikely rise that has been a long time coming. And certainly isn’t being taken for granted.

Through an often painful journey of reflection and self-help, Retail re-emerged as the best performing real estate sector in 2024, achieving total returns of 8.1% (vs 5.5% for All Property). And it has continued to defy the odds ever since, repeating the feat in 2025 (8.2% vs 5.6%) and on course to complete an unlikely hat-trick this year (7.4% vs 5.2%).

But, as the sporting cliché goes, the only thing harder than getting to the top is staying there. Having re-scaled the heights, there is no place for complacency – after all, complacency was one of the very forces that conspired to undermine the Retail market in the first place. Once bitten, twice shy.

Rather than a victory parade, Retail Renaissance 2026 acknowledges many of the challenges that the Retail sector still faces. Above all, we explore six key factors that are currently shaping and defining the Retail landscape and will continue to play out for a considerable time to come.

Death of Online? Maybe not literally, but an overdue killing off of the lazy narrative around e-commerce being a supposed indestructible force on an exponential growth trajectory. The actual direction of travel? Online increasingly an ally to physical retail, rather than an adversary.

Store Wars – a new Hope? Retailers going ‘back to basics’ and re-embracing core retail disciplines. And investing heavily in their physical estates to ensure they are both consumer-centric and fit-for-purpose, breaking a vicious circle of long-term neglect.

RWH: Sleepwalking towards a Supply Crisis? Under-supply and Retail may seem the oddest of bedfellows, but this is increasingly becoming a reality in retail warehousing. Finite supply, rampant occupier demand and a thin development pipeline are collectively driving down vacancy rates to record lows, but equally raising red flags as to potential future supply shortages.

intu: where have they gone to? Six years on from the demise of intu, many of the assets are finally coming to the market. The schemes are attracting a new breed of willing, proactive and committed owners, underlining the fact that Regional Shopping Centres remain not only relevant but also the bedrock of the UK retail scene.

High St: Never Say Never Again. A significant U-turn from a growing number of institutional investors who vowed never to touch high street retail again. But the investment playbook this time around needs to be very different from the one that was deployed previously. Less property-led and geographically-blinkered, more forensic and occupier-focussed.

Business Rates: Making the Inequitable Palatable. Retail & Hospitality bearing a disproportionately high burden of a business rate system in need to total reform. But merely ‘levelling the playfield’ between online and the high street is incredibly complex, as past and incumbent governments have discovered.

Retail – Tough at the Top. But pressure is a privilege.

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