Completely Retail & Leisure 2017: Around £824m has been invested into the UK retail sector so far in 2017, reflecting a slowdown in investment, according to EG data.
Speaking at the Completely Retail & Leisure event at Old Billingsgate Market, EC3, James Child, retail research manager at EG, revealed that of this £347m has been invested in shopping centres and £263m has been invested in retail parks.
The slowdown has likely been prompted by uncertainty surrounding the referendum result.
In 2015 shopping centre investment levels reached £3.7bn, and then decreased by 28% to £2.6bn in 2016. Based on current levels of investment on the year to date, it is likely that this year could be another year of poor investment.
Top deals of the year so far have included Frogmore Estates’ £141m purchase of the Stratford Centre, E15, in Feburary and Capital & Regional’s £78m acquisition of the Exchange shopping mall in Ilford, Essex.
However, local authorities have been able to capitalise on the slowdown in investment and decreased levels of supply, and have been able to use it as an opportunity.
Last year, EG data showed that local authorities accounted for 15% of all investment into the sector.
Investment levels have slowed in line with a decrease in occupational activity, which also fell last year by 21%. This has been prompted by the rise in e-commerce and consumer habits which see a preference for retail spend over leisure.
F&B leasing activity jumped by 23% last year, with occupiers such as Greggs, Costa and Subway being the most active in terms of acquisitions.
Retailers have also started to demonstrate a preference for shorter lease lengths, reflecting the desirability of the offer of flexibility in the leasing sector.
Despite the uncertainty and headwinds that the retail sector is facing at the moment the 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.