Figures released yesterday show that transactions for shopping centres are set to break records this year. Nine UK shopping centres monitored by DTZ have already transacted a total of £717 million for Q3, with a further £1.17 billion under offer. Compared with this quarter last year, when the total figure was only £833 million, this year‘s figures are set to smash previous records. Looking at a greater sample size of 40 shopping centres, investment volumes have reached £3.5 billion.
Jonathan Rumsey, Head of Retail Market Analysis at DTZ, said: “The UK continues to experience positive economic news stories. Recent ONS figures suggest the economic recovery was not as weak as once thought… While occupier demand remains somewhat uncertain in many locations, the shopping centre investment market continues at full steam ahead.”
Big firms such as Land Securities, AXA and Orion Capital are all involved in significant transactions, including major retail centres such as Bristol‘s Cabot Circus, Telford Shopping Centre as well as London‘s Fulham Broadway and Hammersmith Broadway.
The biggest transaction by far has been the sale of Lend Lease‘s 30 per cent stake in Bluewater to Land Securities, which at £696 million was more than £300 million more than the second-highest priced transaction. Adrian Peachey, Head of Retail Capital Markets UK at JLL, commented: ”žInvestor demand proved strong for Bluewater with around 10 parties showing serious interest. The ultimate reported yield of 4.1 per cent reflects the attractiveness of the asset in the market.”
In addition to those centres that have either already been sold or are under offer, another 30 shopping centres are being openly marketed for a total of £887 million. Shopping centre investment volumes for the year have reached almost £3.5 billion, already exceeding the same figures from 2013. This news is further indication of the changing demand in the sector.
Barry O‘Donnell, Head of Shopping Centre Investment, explained: “The current phrase on everyone‘s lips is distressed buyers, no longer distressed vendors. This may be slightly exaggerated but it is certainly becoming harder to buy than it was and there continues to be significant weight of money in the sector. Investment volumes are already ahead of last year for the same period and we anticipate a strong end to the year resulting in volumes surpassing last year and smashing the long term average.”