The retail warehouse sector is becoming increasingly popular amongst investors, with both international and private investors, property companies and UK funds and institutions becoming more active in the warehouse rental and buying space. Several important deals have recently been concluded, the largest of which was the sale of the Keirin Portfolio for £250 million. In addition, London Metric sold three retail park assets in Maidstone, Bedford and Christchurch for £60.9 million.
In spite of numerous high profile retailer administrations over the past few years, JLL believes that vacancy rates are on a downward trend in the retail warehouse sector. This is due to the reduced supply of new warehouse space and short-term pipeline. In general, the demand for high-quality, well-located units from discount retailers is absorbing the legacy space which is returning to the market.
Tim Vallance, Lead Director of JLL UK’s Retail team, stated: “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 focused, 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 and Leisure team, commented: “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.”
- For more information on retail warehouses and out of town units, browse the JLL retail warehouse property selection for sale and let.