Investors attracted to out-of-town retail parks!

February 19, 2018

Recently  modern shopping habits can be seen in the weekend queues of cars at out-of-town locations in the South West such as Cribbs Causeway in Bristol or West Cornwall Shopping Park and Devon’s Atlantic Village.

This is in turn attracting investors to buy into retail parks with the retail warehouse sector recording the highest overall volume of sales in the retail investment market last year, according to research by real estate specialist Colliers International.

Nick Turk, director covering out-of-town retail parks in the South West for Colliers International commented on the research:

“Retail parks are attracting shoppers at a time when many high streets and in-town shopping centres are experiencing declining footfall because they offer good accessibility, free parking and convenient Click and Collect points for picking up internet purchases.”

“Vacancy rates on retail parks are at the lowest in nearly 20 years, with most empty units being filled quickly. The level of vacancy on retail parks is lower than other retail assets despite the rationalisation and administration of several high profile retailers over recent years.

“In addition, the out-of-town offer has evolved from white goods and electronics to leisure, fashion and new DIY concepts. Half of all retail parks now contain leisure and Food and Beverage, and the ongoing roll out of the Bunnings portfolio is set to bring a fresh, new approach to conventional bricks and mortar DIY stores. The number of discount grocery stores anchoring out-of-town schemes has also increased by 78 per cent in the last six years.”

Retail parks are attracting both overseas and UK investors due to the attractive yields and returns. They are also regarded as a safe asset into which to invest capital in politically and economically uncertain times.

As of November 2017 investment values for the year to date are in excess of £2.2 billion on top of many significant deals, which have not yet been publicly marketed.

Mr Turk said: “As a consequence of the booming sentiment in the retail warehouse sector we are seeing a number of new investors enter the market – some from overseas – acquiring assets with a view to renovate, to get an edge on the yield.

“In terms of performance, the biggest investment opportunities are in the secondary market, where improved performance can be unlocked via asset management initiatives. Following booming sentiment in the sector, we are seeing a number of new investors enter the sector – some from overseas – with a view to renovate, to get an edge on the yield.

“Total forecast returns for the retail warehouse sub-market, between 2017 to 2021, are expected to be 4.2% per annum. This is on a par with shopping centres, and ahead of standard retail and supermarkets.”