Around £3.6bn has been invested into the UK retail real estate sector so far in 2017, with a third of that being spent on out-of-town retail assets, according to EG Data.
Since the turn of the year, £1.2bn has been spent on retail parks in the UK, with £725m being invested in shopping centres.
This slowdown on prime malls has been attributed to uncertainty from both buyers and sellers post-Brexit.
In 2015, shopping centre investment levels reached £3.7bn. They then decreased by 28% to £2.6bn in 2016. Based on levels of investment in the year to date, it is likely that 2017 could be another year of poor investment.
Local authorities have been able to capitalise on the slowdown in investment and decreased levels of supply, taking advantage of some low price points to maximise revenue streams and local regeneration.
Last year, EG data showed that local authorities accounted for 15% of all investment into the sector – just over £360m.
Investment levels have slowed in line with a decrease in occupational activity, which also fell last year by 21%.
Food and beverage leasing activity accounted for 29% of all take-up in 2016 – up from 23% in 2015 – with occupiers such as Greggs, Costa and Subway being some of the most active in terms of acquiring new space.
Retailers are also demonstrating a preference for shorter lease lengths, reflecting the desirability of flexibility in the leasing sector.
Despite the uncertainty in investment and take-up, the planning and development sector is still active and developers continue to demonstrate their confidence in the sector, with new schemes and more space coming to the market. Retail park applications are 60% up year-on-year and are at a 10-year high.
It is possible that as much as 5.5m sq ft of retail space could come to the market next year and that a total pipeline of almost 16m ft could come through before 2020 should a number of schemes come through as expected. Though with the continued retail administrations and store closures spilling over from 2016, there are some concerns of an oversupply of space in the market at the current pace of development.
To send feedback e-mail james.child@egi.co.uk or tweet @jamesChildEG or @estatesgazette
