Spotlight: UK retail warehousing

Retail warehousing is arguably the most defensive part of UK retailing against the rise of online retail. This is true for the goods sold, and the flexibility of the space that is available

Retail warehousing is definitely attracting more investor interest this year

Savills Research

Caution was the watchword in the UK retail property sector in 2018, both around the continuing impact of online and the impending impact of Brexit. This led to a sharp fall in investment activity, rising yields across all subsectors, retailer failures, CVAs, and limited occupational demand.

A degree more rationality has entered the market in early 2019, with canny investors starting to look more forensically at UK retail.

Retail warehousing is definitely attracting more investor interest this year, and we believe that this reflects a wider understanding of not only the defensiveness of some parts of retail warehousing to internet retailing, but also the fact that the best assets have perhaps repriced more than they should have done.

The last 12 months have seen prime retail warehouse yields soften by up to 100 basis points, and this combined with a number of willing sellers will mean that transactional activity will rise in 2019.

Significant questions remain about the outlook for this sector, but we believe that dominant bulky goods parks, where over-renting is limited (or can be remedied by buying the asset cheaply), will outperform the wider retail sector.

As ever, the key to bucking the wider trends will be the ability to look behind the headlines and assess the retailer and customer attractiveness of a particular scheme or location.

Read the articles within this publication below

Articles within this publication

4 article(s) in this publication