Retail investors seek location, location, location – Savills
Savills says in its latest Shopping Centre and High Street Bulletin that “the high street is still very much alive” – in contrast to some recent press articles suggesting that the end is nigh. There are still in fact a healthy number of store requirements from “active and successful” retailers, it notes, but the sector is clearly in a period of considerable upheaval, which is expected to see prime areas contracting, and secondary and tertiary locations expanding. Savills says investors currently believe that secondary and tertiary areas will worsen before they start to improve – these locations are expected to see long-term voids and, as a result, rental decline.
Investors are bidding aggressively for the best locations in the most attractive dominant high-street locations such as Guildford, Oxford and Cambridge, the firm says. They are also considering locations further north that are viewed as major retail destinations and are highly affluent including Harrogate, Chester and York. “But again it has to be the very best shop, let off the right rent, for it to even be considered,” Savills notes.
Savills expects the second half of this year to be “extremely busy” for the shopping centre investment market, noting that there will be plenty of stock for investors to consider. So far this year, 24 shopping centres have been traded and a further 25 are under offer, with an additional 17 currently in the market. “We are aware of a number of further assets being prepared for the market for the September quarter”, it adds.
The firm says there are still around 80 shopping centre requirements in the UK market, and an increase in the number of overseas and sovereign wealth fund buyers seeking prime and “super-prime” assets. Savills thinks that prime shopping centre yields are set to strengthen while more secondary and tertiary assets will sell at yields that “reflect the underlying uncertainty of retailers occupying this space and risk at this end of the market”.
