Investors head out of town

Published:  04 May, 2017

Investment in the retail warehouse market nearly trebled in Q1 2017

Overall transaction levels across the retail warehouse sector have jumped to £655m in Q1 this year from £221m in Q1 2016 according to JLL research.

Key deals include the £250m sale of the Keirin Portfolio, and the sale of three assets by LondonMetric for a combined value of £60.9m. The depth of investors into the sector is also growing, with UK funds and institutions, property companies, private investors, and international investors all becoming increasingly active.

JLL believes that with the recent supply of new space and short-term pipeline being relatively subdued, vacancy rates are on a strong downward trend within the sector. This is despite several high profile retailer administrations in recent years. Demand from discount retailers for well-located, quality units, is generally absorbing the legacy space coming back to the market.

Tim Vallance, lead director of JLL UK’s retail team, said: “The retail warehouse market remains an attractive, flexible and cost effective proposition for retailers, with low construction and relatively low occupancy costs. Investment in the sector will remain resilient although stock selection will be key to unlock the best performance opportunities. And it will not be just a question of prime outperforming, as there are opportunities in the secondary market, where occupational demand can be identified.”

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