Secondary retail market seizes up A ‘chasm’ has opened up between the pricing expectations of buyers and sellers of non-core UK shopping centres, according new research from Colliers International. Colliers’ head of shopping centre investment, James Findlater, said: “The volume of capital waiting in the wings of the UK shopping centre sector remains vast, but incumbent owners and potential buyers currently have very different attitudes to appraising risk. “Buyers of non-core centres are unwilling to pay the sort of prices that were achieved through 2014 and 2015 while unforced owners are similarly reluctant to accept lower prices. There is a chasm between seller and buyer expectations which has resulted in a virtual halt to the trading of this type of asset.” As a result Colliers is forecasting a slump in investment turnover for shopping centres during 2017. Last year, saw £2.9bn of shopping centre assets sold – 35 per cent down on 2015. In contrast, the market for prime centres remains strong, according to Findlater: “Core shopping centre assets will remain
extremely liquid,” he said. “Convenience centres, anchored by a foodstore or a good quality footfall driver will also be robust. “For value-add and opportunistic comparison shopping centre assets, return prospects are far more negative. Hugely attractive income yields have lured private equity-backed investors on the back of compelling leveraged returns. The perceived income yields may seem attractive but income preservation has proven itself to be a great challenge. “In the most extreme instances we are seeing some shopping centres being partially demolished so as to mitigate vacant holding costs. The necessity for this extreme measure is the result of no-longer fit for purpose assets being crowded out by the general oversupply of retail space.” Findlater advocates the need for permitted development rights – under which office and industrial property can be redeveloped for residential use – to be extended to the retail sector. He believes a wave of “creative destruction” could be necessary to usher in a new fit-for-purpose UK shopping centre sector.
Independent trader profile - Temptashun Gifts In 2010, after 22 years in retail, distribution and logistics with high profile brands such as Game, M&S and The White Company, Cerys Lawrence decided to take advantage of her valuable experience and branch out on her own, selling silver and Tibetan jewellery at fairs and festivals. By 2015 she decided to expand her range to include Italian fashion wear, accessories and perfumes. At the time there was no other sole trader providing Italian fashion clothing in her local area and she found that there was a big market for this, especially popular during the summer months. She explains: “I started as a fayre sole trader and as my knowledge rapidly grew, I realised that I wanted to become SHOPPING CENTRE MARCH 2016 2017
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an established retailer in one place, rather than be known as a market trader. The two forms of retailing are very different.” She chose to rent mall space at Newlands shopping centre, working with Space to trade account manager Michelle Clark to grow her business. “In time I would like a shop unit, but at the moment I need to become established in one place and grow my customer base,” she explains. “With a shop you have to wait for the public to walk in, but with an RMU customers are walking by your and seeing products all the time. I can honestly say that I love my business and would recommend anyone wishing to take the leap into setting up their own retail business to start with mall space.” www.shopping-centre.co.uk