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Connectivity and strong market fundamentals means Fosse Park has potential to be a ‘retail power centre’
London, 14th August 2014 – The sale of one of the UK’s most successful shopping parks to a joint venture between The Crown Estate and Gingko Tree Investment for £345.5m, demonstrates belief in the resilience of the retail asset in its regional context and future opportunity according to the JLL Retail & Leisure Team.
The price reflects more than just current day performance and has parallels to the recent sale of Bluewater to Land Securities.
The shopping park boasts almost 600,000sq.ft of retail accommodation, 2,500 free parking spaces, strong regional connectivity, in excess of 8 million shoppers per annum, 84 per cent shopper conversion, £88 average spend and a dwell time of 93 minutes. For a number of leading retailers, Fosse Shopping Park has consistently performed in the top quartile since opening 25 years ago. Valuers and commentators alike have struggled with the relatively high rents on the park, but retailers continue to be attracted to the consistently high revenues they can drive from this location and with Primark recently agreeing to lease a 74,000 sq ft anchor unit, the resilience of these revenues continues.
The deal further underlines the appetite of Chinese investors to expand their real estate portfolios overseas. Overall Chinese outbound investment is 17 per cent higher in the first half of 2014 than over the same period of 2013 at US$5.4 billion. Whilst London has been the most notable magnet for this capital, the UK regional market has also generated interest from both institutional and private Chinese buyers across sectors. This is a trend that we expect to continue as investors seek value both in the UK and in European markets.
The joint venture alongside Gingko Tree Investment is the Crowns third major joint venture in recent years, the first being with Norges on Oxford Street and Oxford Properties on St James. The Alliance of “equity and expertise” has been the principal structure through which International capital has accessed the market favouring joint ventures with sector specialists with alignment capital. Transactions in this manner have increased significantly over the last 5 years representing approximately 25 per cent of the volume of transactions over €100m and a volume of over 12.6bn in 2013.
Tim Vallance, Head of Retail & Leisure at JLL commented: “It is the connectivity and strength of market fundamentals in particular that contribute to Fosse Park’s success and resilience. Real opportunities exist to further develop Fosse, to create increased critical mass and destination appeal and to provide a relevant retail and leisure offer that is aligned with changing consumer and retailer requirements. The Crown Estate has a strong track record of redefining retail places, typified by its transformation of the Regent Street and St. James Estates in London. With further investment to embed vitality, dynamism and proactivity at the core of Fosse Park’s design, The Crown will be able to produce a “retail power centre” for Central England.”
James Brown, Head of JLL European Retail Research and Consulting added: “Against the backdrop of structural change in retail, it is becoming increasingly difficult to navigate the market, but like Bluewater, the role and function of Fosse Park is pretty clear for the retailer and investment market to see, and this is reflected in investor appetite and pricing. It isn’t a case of Retail Warehouse vs Shopping Centre vs High Street, but appropriate and relevant retail with strong resilience attributes; Fosse has these in abundance.”
Lead Director - UK Retail & Leisure
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Head of European Retail Research
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+44 (0)207 852 4084