The recent concentration of total retail sales in large schemes and scarcity of further developments has meant that the start of 2011 has started strongly for shopping centre acquisitions, a new report reveals.
Global property consultant Cushman & Wakefield estimates that the total turnover on centre investment transactions totalled over £2 billion in the first quarter of 2011, though this was down slightly on the amount achieved in Q4 last year when spending was a high as five years ago.
Capital Shopping Centres’ purchase of The Trafford Centre in Manchester was easily the biggest deal at £1.6 billion but another notable deal involved four shopping centres owned by St Martin’s, in Croydon, Lichfield, Newcastle and Coventry, being bought by Hammerson for a total of £160 million.
Cushman & Wakefield estimate that around £579 million worth of schemes were currently under offer in Q1 with investment demand remaining strong as real estate investment trusts and UK institutions seek prime stock and the property companies pursue schemes with a higher yield.
Charlie Barke, Head of Shopping Centre Investment at Cushman & Wakefield, said: “Looking ahead, it appears there will be short term downward pressure on prime yields as demand continues to outweigh supply.
“Secondary yields appear stable at present, though a significant increase to investment supply could leave these yields vulnerable. We do anticipate seeing an increase in the amount of stock on the market over the next quarter, principally bank-led sales.”
With Westfield Stratford City the only new major shopping centre scheduled to open in 2011 and Trinity Leeds the only one for 2013 so far, investors have needed to look to current sites for prime space.
Along with the couple of large transaction completed during the first quarter, a number of smaller acquisitions took place including British Land’s £30.3 million purchase of Green Lanes in Barnstable, and Princes Mead in Farnborough which was bought for £26.3 million by KFI.