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News Release

London

Investment in the retail warehouse market nearly trebles in Q1 2017

Investment up to £655 million from £221 million in Q1 2016


LONDON, 2nd May 2017 - Overall transaction levels across the retail warehouse sector have jumped to £655 million in Q1 this year from £221 million in Q1 2016 according to JLL.

Key deals include the £250 million sale of the Keirin Portfolio, and the sale of three assets by London Metric for a combined value of £60.9 million. 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 in particular, 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, commented: “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 we will start to see it becoming more focussed, with increased sophistication of underwriting.

“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.

Nick McConnell, Director in JLL’s Out of Town Retail & Leisure team, added: “The main strengths of the sector are around accessibility and convenience, and the provision of a stress-free, congestion free and cost effective shopping trip. As a result, it is well placed to benefit from the growing trend for ‘Click & Collect’, particularly with its free parking offer.”

JLL transacted on 38% of all deals this quarter.