Leisure spend totalled £238bn in 2016, accounting for 20% of consumer spending, according to Knight Frank’s Welcome to the Leisure Dome report.
The commercial property agent described food and beverage as “the trailblazer” of leisure, with new shopping centres allocating 20%+ of space to F&B and many existing schemes being backfilled.
But it warned the F&B market was geographically polarized, with some markets over-supplied, rents unsustainable and fall-out is “inevitable”.
Meanwhile some towns are still under-served by F&B, including many regional centres.
The report reveals leisure has grown by an average of 5.7% over the last 30 years, an accumulated percentage growth of 429%, with £1 in every £5 spent by consumer going on leisure.
F&B makes up 42% of leisure spending, with shopping centres historically devoting 6-7% to the sector, now up to 22%.
It warns rents are at risk of over-heating, with as much as £150/sq ft bring charged in central London, and cost pressures in London particularly around business rates giving the sector a reality check.
David Legat, partner at Knight Frank, said: “On the back of the rates revaluation there is likely to be a significant (and imminent) rise in property costs, over and above the expected inflationary price rises and additional cost of both produce and staff.
“Ongoing uncertainty around Brexit is not helping matters, with the fate of the skilled migrant workers, upon which the Central London restaurant scene relies, far from certain.
These record rents are bound to claim a few casualties, taking into account expected higher operational and occupancy costs, despite the transitional relief that some operators will benefit from when it comes to the rate increases.
“In the face of a potentially over-heating market, we expect rents to plateau and operators to take a more considered approach in assessing the viability of opportunities when they present themselves.”