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Shopping centre transactions increase in Q3

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Shopping centre transactions have increased by 32 per cent in the third quarter, according to real estate adviser DTZ.

Over the period 16 shopping centre transactions totalling £447 million were completed, while 15 schemes remained under offer at the end of September as investors became more cautious of ongoing economic fragility.

According to the company, a mixture of strong demand and limited supply is supporting prices for prime and dominant secondary assets, but investor caution over the price of secondary and tertiary stock is now leading to an increase of negotiable transactions.

Mark Williams, Senior Director in Retail Investment at DTZ, noted a number of well-known shopping centres that had sparked investor interest.

Land Securities’ Corby Town Centre, the Ealing Broadway Shopping Centre and The Houndshill Centre, Blackpool are all reportedly under offer, a surprising finding considering the lack of recent development in retail real estate, particularly in larger shopping centres, as economic uncertainty continues to affect consumer spending.

Retail sales growth declined steadily over the summer, and Williams pointed out that, while this increased interest is positive news, many businesses are continuing to experience a deterioration in sales performance.

Williams advised caution and referred to a recent Northern acquisition as something for concerned parties to keep an eye on.

“The Victoria Quarter sale in Leeds will be a key test for prime pricing, while further secondary sales will provide evidence of outward yield shift,” he warned.

“Consumer spending will continue to disappoint, with decline probably extending into 2012. Rationalisation of retailer outlets and even further failures can be expected.

“Especially vulnerable will be schemes with short unexpired lease terms, which will struggle to sell.”

Published on Thursday 13 October by Editorial Assistant

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