Report says a number of deals are expected to complete before the end of the year
London, September 16, 2015 – Shopping centre investment volumes for the first three quarters of 2015 are expected to have dropped significantly compared to the same period 12 months earlier. However, a strong end to the year is predicted with more than £3bn of stock under offer or available, according to research from Cushman & Wakefield.
According to the Shopping Centre Development Report out today, investment volumes from the start of the year to the end of September are predicted to reach approximately £2.78bn. This figure is significantly down on the Q1-Q3 2014 figure of £4.33bn. A significant factor that contributed to the slowdown is thought to have been the UK General Election in May which delayed a number of deals from being marketed.
However, with due diligence completing on a number of deals over the summer months and with approximately £3.16bn of shopping centre stock under-offer or available, investment figures are set for an end of year surge. These investment figures include development that have completed in 2015 such as Grand Central Birmingham, which has generated a lot of interest from a range of investors in the market.
The report also shows that the total volume of shopping centre space due to be completed in 2015 is expected to be approximately 2 million sq.ft. This is marginally down on the five year average (2010-2014) of 2.2 million sq.ft but 24% up on the low volumes of space added in 2014 of 1.6 million sq.ft. Completed space in 2016 is likely to remain steady at approximately 1.8 million sq.ft.
Six new schemes and four extensions are due for completion in 2016. Yorkshire & Humberside is leading the way in delivering new shopping centre space, with Victoria Gate in Leeds (450,000 sq.ft). Chelmsford Bond Street is another notable new development in the South East, totaling 300,000 sq.ft and anchored by a 120,000 sq.ft John Lewis.
In 2017 development is likely to be subdued due to viability challenges and projects being deferred, with just 1.1 million sq.ft arriving through three new schemes and one extension. Bracknell Town Centre’s regeneration adds the highest proportion of retail space with 580,000 sq.ft to be delivered.
Justin Taylor, Head of EMEA Retail, said: “The real estate market has been going through a period of yield shift which has delivered some excellent returns for strategic investors in shopping centres. The next few years look likely to be more about income growth than yield movement so the value of a good asset manager could be considerable. Subsequently, landlords are now looking to maximise their existing assets, with an increasing number of extensions, as well as hitting the refurbishment button once again. Indeed, it is becoming increasingly clear that those shopping centres that offer convenient, well-located establishments providing a ‘destination’ appeal – complete with leisure components and all a shopper could need under one roof – are the winners of the future”.
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