by Alex Catalano
Institutional investors have over £100m ready to invest into retail warehouses, according to a survey conducted by agents Bernard Thorpe & Partners.
Just over half of the 100 or so funds questioned said they preferred a retail park. However, few have the financial resources to sink a minimum of £5m into such a purchase, so the alternative is individual units, either in a park or on the main roads within key towns and cities. Access is crucial, and few would consider units on an industrial estate.
The average fund or insurance company looks for a yield of between 7 1/2% and 9%, and about a third of those were prepared to accept below 8%. Some said they would take 7% “for the right property in the South East”.
However, location was not an issue for the 42% who said they were prepared to invest anywhere in the UK. Only about a third expressed a preference for the South East.
As the retail warehouse market grows, the traditional fallback of gearing the rent to a percentage of warehouse rents is being abandoned. Open-market reviews were favoured by 61% of the funds surveyed.
And, according to Bernard Thorpe & Partners, a two-tier market is beginning to emerge between new retail warehousing and “first generation” units which are now classed as substandard in terms of size, location or access.
