Completed UK shopping centre investment transactions totalled £974.45 million across 22 shopping centres in Q2 2015 bringing the half-yearly total to £2.17bn, according to research published by DTZ.
A further £919m of shopping centres are currently under offer with approximately £1.2bn of assets available or being prepped for market.
During Q2 2015, investors sought out greater value in secondary and tertiary stock outside London, with 86% of the total volume transacted regionally.
Transaction volumes are set to reach similar volumes as those witnessed in 2014 with a number of large lot size shopping centres coming to the market this year. Perhaps the most anticipated is the new shopping centre, Grand Central Birmingham, set to open in September this year. DTZ is advising on the sale on behalf of Birmingham City Council and Network Rail with the scheme marketed at offers in excess of £260m.
Phil Glenn, Valuation Director in DTZ’s Nottingham office commented: “The major cities in the East Midlands have all seen investment in their shopping centres in recent years and this continues with the likes of Intu’s ongoing improvements to the Victoria Centre in Nottingham. This, coupled with improved retail sales due to consumer confidence, lower retail failures and improved occupier demand in certain sub-sectors such as casual dining has contributed to a more positive regional retail picture. As a result we would anticipate strong demand for prime or secondary centres in line with the national picture. The lack of stock continues to be a challenge for investors.”
Barry O’Donnell, Head of Shopping Centre and Outlet Investment, said: “Demand for investment stock remains exceptionally strong. The positive news for investors is that supply is now beginning to meet these high levels of demand with more than £2.1bn of shopping centre stock either under offer, available or being prepped for market. With a number of large lot sizes coming to the market we expect even higher transaction volumes in the second half of the year with year-end figures estimated to reach 2014 levels.”
Super prime and prime yields have remained stable at 4.25% – 4.50% and 5.25% respectively but are trending in. Secondary, dominant secondary and tertiary have all hardened 25bps over the quarter to 6.25%, 7.75% and 8.25% respectively.
The occupational market has continued to improve as retail sales saw the 26th month of consecutive year-on-year growth and the consumer confidence index at its highest level for almost 15 years.
Jonathan Rumsey, Head of Retail Market Analysis at DTZ, said: “Retail sales as measured by the ONS have seen 26 months of consecutive year-on-year growth, the longest sustained period of growth since 2008. Low inflation, rising employment and real wage growth have led GfK’s consumer confidence index levels to rise to a level not seen since the turn of the century, while vacancy rates remain at their lowest since 2010.
“Additionally, the list of retailers looking for new space continues to grow, with occupiers such as Jessops, David’s Bridal, Tapi Carpets, Kiko Milano and a plethora of casual dining operators announcing their ambitious expansion plans. This all adds up to a very positive outlook for investors able to secure the right assets.”
