The Easter public holiday and a lack of available industrial stock were among the factors driving a decline in UK investment volumes in April, according to research by Colliers International.
Investment into UK commercial real estate reached £2.6bn in April, down from £4.2bn in March.
The reopening of retail and leisure also played a part in the more muted volumes.
Colliers’ latest Property Snapshot found that three of the four largest deals in April were portfolios, led by Brookfield’s purchase of seven retail parks for £330m. The largest single deal of the month was the sale and leaseback of McLaren Group’s global HQ in Woking for £170m.
Retail was the only sector to record an increase in investment volumes compared to March, reaching £700m, compared to £410m in the previous month. This was mainly buoyed by Brookfield’s retail park acquisition, thought to be among the 10 largest retail warehouse deals ever recorded.
Supermarket Income REIT was also an active buyer, buying a 54,300 sq ft Tesco in Colchester for £63m. Elsewhere, Melford Capital bought Northampton’s Riverside Retail Park for £55m and a private investor purchased a 77,600 sq ft Sainsbury’s in East Barnet for £50m.
Office investment volumes were muted in April, with around £550m transacted. This was down from £870m in March.
The McLaren sale and leaseback was the largest single deal of the month, with other highlights including a joint venture between Harrison Street and Trinity IM acquiring the 12-asset BioCity Group portfolio for £120m. Manchester saw one of its largest deals in recent months, as 8 First Street was sold to Ashtrom Properties UK for £82m.
Demand for industrial assets remained strong, but was hampered by a lack of available product. Volumes reached £600m in April, down from £1.5bn in March.
Aberdeen Standard was particularly active, buying four separate assets for a combined £235m. The largest of these was a 779,000 sq ft distribution warehouse on Field Lane, South Elmsall, which was bought for £110m.
Tritax and Prologis also continued to expand, with the former purchasing an 872,000 sq ft warehouse at Avonmouth’s Accolade Park for £90m and the latter buying back the former Arcadia distribution centre in Daventry for £82.5m.
The leisure and alternative segments attracted a combined £730m of investment in April, down from just over £1bn in March. The student accommodation sector accounted for £350m, the second-highest monthly figure since the sale of the iQ portfolio a year ago.
The figure was boosted significantly by the £315m sale of the Quintain portfolio to Lone Star, comprising 2,621 student beds across four assets in Cardiff, Hatfield, Sheffield and Swansea. In one of the largest leisure deals so far this year, Centrica Pension Fund bought a David Lloyd centre on Northwood’s Ducks Hill Road for £51m.
Oliver Kolodseike, deputy chief economist at Colliers, said: “The drop in April’s investment volumes is somewhat tempered by the growth of the economy by 2.1% in March, providing hope that April’s economic figures will follow suit as retail and leisure were able to reopen in some capacity
“A focus on the easing of restrictions and the Easter bank holiday have all meant that activity was muted in April, and a lack of stock continues to hamper the industrial sector. However, a sense of relative normality should help activity pick up as we head into the second half of the year.”
John Knowles, head of national capital markets at Colliers, said: “Although there was a slight dip in activity in April, there is still a real sense of pent-up demand in the market.
“Completed deal levels understate the enthusiasm and negotiations ongoing in the market, as well as the increasingly diverse array of global investors seeing value in UK real estate.
“We are seeing significant appetite for top quality offices and future-proof assets such as student accommodation and BTR schemes, and expect momentum to only build from now to the end of the year.”
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