Two quarters ago we suggested that retailer demand was becoming stronger than many commentators were saying, and even used the term 'space race'. The last three months has brought more evidence of this, with rising demand both for prime and secondary locations.

The news that several major UK retail grandees are rolling out new concepts at opposite ends of the spectrum, has further strengthened this view. Adrian Mountford's Pep&Co (advised by Savills) is planning on opening 50 stores this year, focusing on value hotspots. Their ultimate plan is to have a UK portfolio of 500 stores offering fashion and homewares to markets that have perhaps been passed over by Primark's national roll-out.

While you might think that finding 3,500 - 5,000 sq ft stores in non-core markets would be easy in today's environment, the competition has been intense for some locations as other retailers are also looking to expand into these markets.

Pep&Co is one example of a number of retailers who are pursuing a substantial expansion at the moment, and this indicates the strength of demand for a variety of locations, as well as retailer's rebuttal of the much talked about trend that online has meant that you only need a handful of physical stores to cover the country. We expect this to feed through into a drop in vacancy rates in both prime and secondary locations.

The other trend that we have noticed over the last few months is a broadening of the recovery in retailer requirements away from London and the South, to the rest of the country. This is mirroring the ripple outwards from these areas of house price growth. Indeed, we believe that the market is on the verge of seeing premiums being paid by retailers in very select cases outside London as competition in those prime pitches hots up.

Of course, as usual in retail not everything is rosy. The major food retailers are stuck in a spiral of negative newsflow and debates on precisely how over-stored they might actually be. We definitely expect to see further downsizing in store numbers amongst the big three food retailers. However, with the UK population forecast to grow by a further 4.2 million people over the next decade it seems undeniable that we will be buying more food from more locations.

While the food retailers are probably in a period of decreasing store sizes, the same is not true in the fashion sector. The rise of click-and-collect is having a substantial impact on typical stores sizes, and we have noticed that requirements from some of the mid-market clothing retailers have doubled in size over the last 12 months as they adapt their needs to fit in larger storage areas in store. Another factor behind this expansion in requirement size is the desire to open stores that can offer all or the majority of the SSU's that are available on the retailer's website.

Looking ahead we believe that as the consumer economy continues to recover, the competition for stores in strong trading locations across the demographic spectrum will intensify. In the medium term this will make some stalled shopping centre developments more viable, but in the short term we expect to see rising pressure on inducements and rents.