The CBRE Retail team knows retail property. Our teams cover retail agency, out of town, shopping centres, lease consultancy and capital markets as well as corporate occupier services, research and consultancy. Based in the west end of London we have an extensive team covering central London retail as well as offices across the rest of the UK specialising in local retail knowledge.
Contact one of our experts today to find out how we can help you: +44 (0)20 7182 2000
Follow CBRE on LinkedIn for our insights on the UK commercial property market:
The last eighteen months have appeared to signal a sea change in the fortunes of the big-5 full-line grocery majors: Tesco, Sainsbury’s, Morrisons, Asda and Waitrose. After almost three decades of unbroken market share growth, peaking at a startling 81.4% in 2011, the big-5’s market share has finally begun to slip.
Overall, the grocery pipeline has grown by over 18.79m sq ft (65%) since the onset of the credit crisis in second-half 2007.
The amount of new grocery space under construction in March 2014 was 2.47m sq ft, marginally down on the 2.95 sq ft in March 2013.
Convenience store openings continue apace but are still dwarfed, in aggregate floorspace terms, by superstore development.
The industry-wide shift away from very large hypermarket –style units continues but grocery superstore development (much of it out-of-town), remains buoyant. The main growth inhibiting factor, as always is planning but schemes are also being shelved at an increasing rate as the big-5 take account of the seeming inexorable market share shifts occurring.
UK GDP levels have returned to pre-Credit Crisis levels but GDP per capita levels have not. Wage inflation is still well below RPI. Until economic improvement feeds through into a sustained real increase in household incomes, shop expansion activity and shopping centre development will remain at a low ebb. Currently, a sustained recovery in consumer spending still looks to be a number of years away.
Shopping centre proposals have almost halved from 30m sq ft in 2009 to just 15.5m sq ft today. We expect the overall shopping centre development to continue contracting, falling from 48m sq ft currently to circa 40m sq ft in 2016/2017.
The current pipeline still contains a large number of shopping centre schemes that continue to be rolled-forward but that remain unviable.
Shopping centre construction levels have lifted marginally but are still at just 40% of 2007 levels. The low level of shopping centre development activity in provincial markets has resulted in acute shortages of new large-store anchor stock.
All in all, it has been a very positive Summer for the Belfast property sector, helped in no small part by the lack of disturbances during the traditional marching season and an encouraging volume of tourist-related activity across the region.
The outcome of the forthcoming Scottish Independence referendum on September 18th will be closely watched in Northern Ireland on the basis that the debate on Northern Ireland being given autonomy to lower its corporate tax rate to compete with the 12.5% prevailing in the Republic may resume once a decision has been made regarding Scottish Independence.
Neil Blake and Graham Barnes, experts from leading real estate provider CBRE, provide monthly analysis on the latest macroeconomic and capital markets factors that shape and influence commercial real estate markets.
As usual things have quietened down over the summer. After the surge of positive property market and economic news in the earlier part of the year, attention has turned to international events, annual leave and the ritual of rainy bank holidays. If anything, there is a bit of a feeling that the UK’s economic recovery may be softening driven, not least, by a string of disappointing economic news from the larger Eurozone countries and the generally sideways movement of equity markets since the spring. A glance at recent economic statistics, however, does not really support the softening recovery hypothesis.
True, manufacturing has come off the boil. The PMI survey results have weakened and manufacturing output is down. This reminds us that manufacturing remains the sector most exposed to international difficulties. In contrast, for services there has been some improvement in the PMI over the last two months but the situation since last summer can best be described as “bumping along the top” (in sharp contrast to the “bumping along the bottom” that we became used to during the recession). Eurostat’s Economic Sentiment Indicator for the UK also jumped up last autumn and, despite small month-to-month movements, has remained extraordinarily strong ever since. These levels of survey responses are easily consistent with Q3 growth at or above the 0.8% recorded in the first and second quarters.
It has not been a quiet summer. One could have assumed that the sale of Lend Lease’s interest in Bluewater to Land Securities was the last big deal before the autumn, but that would have been a mistake.
Against a background of, at best, variable economic and political news: UK real wages falling, the Eurozone GDP at best flat and Germany shrinking, wars and rumours of wars in Ukraine and the Middle East (Syria, Gaza, Iraq) and political instability in France, the attraction of commercial real estate has been, at the very least, maintained.
In the UK we have seen continued activity across the asset quality spectrum and across the capital stack. By way of examples I would pick the sale of Max Property’s entire business to Blackstone at a 22% premium to net asset value and the acquisition of Woolgate Exchange by Cathay Life, the Taiwanese insurer, from TPG Capital and Ivanhoe Cambridge for £320 million, compared to its last transaction price of £260 million in February 2013. In the capital sphere the pricing of the Westfield Stratford £750 million CMBS at a spread of 75bp sets a new post-crisis low. This process of capital flow towards real estate does not seem to be over with reports of in excess of 200 registrations of interest in 30 St Mary Axe (despite pricing expectations in excess of £600 million) which is being brought to the market by the receiver.
UK commercial property experienced a weaker performance in August 2014. Total returns for All Property were 1.4%, mainly driven by the capital value growth of 0.9% over the month. Rents increased by 0.1% over the month.
Although some rental value growth has been seen in most of the segments for some time now, there is a divergence between regions in terms of the pace of increasing rents. For Offices and Retails, rents in South Eastern England including Central London continued to increase faster than in the rest of the UK.