Property company British Land said today that there remains a strong demand for retail space in the UK, though it varies sharply in different areas of the country.
Occupancy at British Land’s sites in the UK, including Meadowhall shopping centre in Sheffield and the newly acquired Drake Circus in Plymouth, stood at 98.5 per cent during the year to March 31st 2011, while rental values were 0.7 per cent ahead for the full year.
An annual preliminary statement published by the company this morning indicated that the retail environment got much tougher in the second half of the year as government austerity measures began to be felt, resulting in mixed results for the property firm.
“While consumer spending held up better in the south-east, the strength of demand was more a reflection of the attractions of individual assets - accessibility, affordability, unit configuration and overall environment - than their regional location,” the group said.
“We saw stronger retailers start to expand their footprint in the best locations but at the same time more aggressively looking to reduce their exposure to their smaller and more poorly performing stores.”
It added that a number of weaker retailers have been reducing their store portfolios to cut costs in light of a slowdown in consumer spending, but it remains confident in the business’s future growth.
Against this backdrop British Land’s retail portfolio performed well, with retail assets rising 5.3 per cent in value to reach £6.3 billion and capital returns up 5.6 per cent.
The group as whole, which also owns £3 billion worth of office space in the UK, reported encouraging financial results for the year, with underlying pre-tax profits at £256 million - up 9.9 per cent year-on-year excluding a credit provision release in 2009/10.
Its property portfolio value increased by 6.9 per cent to £9.6 billion, with net asset value per share up by 12.5 per cent to 567p.
CEO of the business Chris Grigg argued that British Land is showing “real momentum” at present and described the company’s retail portfolio as “high quality”.
“Our strong letting performance across our portfolio shows clearly that there is still demand from occupiers for the well-located prime retail and London office assets we provide and we expect this to continue,” he explained.
“With our strong asset base, management expertise and financial strength we are well placed to continue our strong performance.”