United Kingdom Retail - The Property Perspective H2 2017
UK economic growth slowed to 1.5% in H2 – Retail sales volumes grew by 0.9% and unemployment rate is holding at 4.3%.
UK high street rents for ten cities grew by 2.6% over the past 12 months and the busiest shopping destinations continued to see rental growth.
Overall, high street transactions have decreased by 7.8% in 2017 to £1.13bn. The High Street investment market for 2017 was characterised by lot size.
Central London demand and supply remain finely balanced as rent remain resilient in key streets.
Central London investment volumes rebounded in Q4, but restricted to £1.5bn in 2017 due to very few large transactions.
The amount of new shopping centre space opened was c. 187m sq ft in 2017, in part largely due to the contribution of three main schemes.
Shopping centre transaction volumes were 30% down in 2017 on 2016 and reached 2.13bn. Activity for ‘Best Secondary’ assets rose.
Retail Park have seen a slowdown in construction activity, prime rents for all Retail Warehouse Parks have increased by 0.5% annually over the past three years.
Grocers are now selectively starting to take up space again for smaller store formats.
Casual dining operators face challenging times due to consumer’s decrease of disposable income, a decrease in consumer confidence and cost pressures and cost pressures.
The Logistics sector is evolving further with online retail and third party logistics gaining momentum.
The Christmas results for retailers showed a mixed performance and if inflation at 2.7% (CPI) in December 2017 is taken into account, the story for many occupiers is not as strong as it might have been hoped.