2022 FORECAST
Social society
Recovery within the leisure sector will continue during 2022 as consumers look for enjoyment through experiences in physical locations. Uncertainty will remain in some parts though, particularly those areas where the business is over-rented, over-geared, poorly invested in or unable to maintain a competitive edge. Vacancy rates are forecast to continue to rise during the year, but the pace will slow down and is forecast to total 12.1% by the end of 2022.
P(leisure) / Pain
Since 2020, an estimated 28 million sq ft of UK retail space has closed permanently. Whilst some of this space, especially in prime locations, is likely to be occupied by other retail tenants, much of it will need to be repurposed.
LEISURE VACANCY RATE
Since 2020, an estimated 28 million sq ft of UK retail space has closed permanently.
Over 650 live/former-retail stores were converted into mixed use schemes in the first half of 2021.
Over 650 live/former-retail stores were converted into mixed use schemes in the first half of 2021 and this is expected to rise further as local authorities and landlords take action to revitalise those high streets and shopping centres that now find themselves with lots of vacant units. Leisure operators will be assessing opportunities in prime locations as they look to expand across the UK.
For example, Roxy Ball Room is expanding its UK estate with requirements in major cities including Leeds, Liverpool, Manchester and Birmingham. Sites in the best locations, particularly those with a large student catchment or a strong after-work socialising culture, will prove attractive to leisure operators for opportunities to bring their concepts into areas to take advantage of ‘competitive socialising’.
RETAIL REDEVELOPMENT ACTIVITY
Here comes the fun
Former-department stores are ideal locations to convert into leisure venues because of their large footplates. At the Southside shopping centre in Wandsworth, leisure operator Gravity repurposed a former-Debenhams store into a multi-purpose leisure destination which includes an electric karting track and a 14-lane interactive bowling alley amongst many other activities. The former-House of Fraser store on Princes Street in Edinburgh has now been converted into a visitor attraction for the Johnnie Walker whisky distillery. Padel tennis operator, Game4Padel has agreed a 10-year lease with Westfield London to operate three courts at the shopping centre to accommodate the growing popularity of the activity.
Toca Social, which recently opened an interactive, immersive football experience at the O2 arena in London, is expected to open its second location at the Bullring in Birmingham as part of landlord Hammerson’s plan to reposition the shopping centre into ‘vibrant evolving spaces where people and brands want to be’.
Construction is expected to commence on the UK’s first city-based wellbeing resort at Trafford Park in Manchester. Therme Manchester, a 28-acre site, will include indoor and outdoor swimming and leisure facilities, botanical gardens, and a range of swim-up bars, therapeutic pools, and wellbeing activities. Peel have also gained planning permission for a surfing centre, retail, restaurants, and other leisure activities. When all of these new facilities are complete, Trafford Park is forecast to attract up to two million visitors each year, solidifying its reputation as one of the top retail and leisure destinations in the UK.
E-sports on the rise
For long periods during the pandemic, live sporting events were either cancelled or held with restrictions on audience numbers. To this backdrop, e-sports hugely grew in popularity. An estimated 470 million people watched e-sports in 2021(up from 430 million in 2020 at the height of the pandemic) and it is forecast to increase to 576 million by 2023.
The global value of the market is also forecast to double from £800 million in 2020 to £1.6 billion by 2025. As demand grows within this sector, larger venues will be required to cater for the demands from gamers to watch and take part in tournaments. Traditional UK locations have typically been small e-gaming cafes, but this is now set to change. Four new e-gaming venues have been earmarked to open in the UK including a 1,200 seated auditorium in Southport and a 4,000-seat arena in Dundee. With gamers potentially able to earn millions of pounds in prize money from these events, in front of large audiences, there is the potential for more of these venues to open across the UK.
E-sports on the rise
For long periods during the pandemic, live sporting events were either cancelled or held with restrictions on audience numbers. To this backdrop, e-sports hugely grew in popularity. An estimated 470 million people watched e-sports in 2021(up from 430 million in 2020 at the height of the pandemic) and it is forecast to increase to 576 million by 2023.
The global value of the market is also forecast to double from £800 million in 2020 to £1.6 billion by 2025. As demand grows within this sector, larger venues will be required to cater for the demands from gamers to watch and take part in tournaments. Traditional UK locations have typically been small e-gaming cafes, but this is now set to change. Four new e-gaming venues have been earmarked to open in the UK including a 1,200 seated auditorium in Southport and a 4,000-seat arena in Dundee. With gamers potentially able to earn millions of pounds in prize money from these events, in front of large audiences, there is the potential for more of these venues to open across the UK.
The box office returns
Box office revenue will recover as many of the delayed 2021 blockbuster movies will be released in 2022 – the much delayed James Bond movie has already grossed over £700 million, giving cinema operators a much needed shot in the arm, and confidence moving into next year that consumers still want to enjoy the experience rather than stream a movie at home. Over the medium term the distribution window between cinemas and the home market remains an ongoing challenge.
The much delayed James Bond movie has already grossed over
Overseas travel to bounce back
The boom in domestic tourism witnessed in 2021 is likely to recede in 2022 as holidaymakers look to venture abroad again. Data from American Express showed one in five British people have already made an overseas booking in 2022 and it predicts that £41.2 billion could be spent on international holidays in 2022. Demand will still remain for domestic holidays though. Original Cottages, which has a portfolio of more than 5,500 properties, announced that bookings were up by a third for summer 2022 compared with 2020. It’s estimated that, if a preference for UK holidays continues at the same rate in 2022, it will add up to £9.2 billion to the domestic tourism market.
Off the back of the uptick in domestic demand, UK holiday property is proving an attractive market to investors. For example, CVC Capital Partners acquired holiday park operator Away Resorts for £250 million and US REIT Sun Communities has acquired Park Holiday resorts for c.£900 million from Intermediate Capital Group (who acquired the portfolio for £362 million in December 2016).
Social Society
After a tumultous two years the leisure sector will see an increase in spend compared with 2021. Competitive socialising will continue its rise in popularity with the expansion of existing concepts across the UK but also from a wave of new entrants offering new concepts to capitalise on consumer demand following the pandemic. However, recovery will still be driven by factors outside of the sectors’ control; the speed and size of the return of international tourism, and consumers’ willingness to return to pre-pandemic behaviours.
If international tourism returns to pre-pandemic levels, the attractiveness of the UK holiday property market may diminish for investors.