Around £450m was invested into retail properties in Glasgow last year, despite the cost-of-living crisis, low consumer confidence and hybrid working affecting city centre footfall.
Property analytics firm CoStar Group stated that this figure - an eight-year high - would likely have been higher, had it not been for rising interest rates and the UK Government’s ill-fated mini budget, which curtailed activity from September.
Robust investor appetite for retail warehouses, seen as a defensive play due to their often 'essential' and omni-channel tenant mix, drove volumes before the autumn slowdown.
Realty Income’s acquisition of Great Western Retail Park in June was among the standout deals of the year, according to CoStar. The £87m purchase at a 6% yield underlined the strength of investor appetite for retail warehouse parks.
Several smaller retail warehouse transactions also completed over the summer, including Supermarket Income REIT acquiring West End Retail Park for £34.5m - or a 5.3% yield - and Savills Investment Management buying the Aldi and M&S-anchored Cumbernauld Retail Park for £24.5m.
Earlier in the year, Fiera Real Estate purchased Atlas Retail Park for £11.3m at a 5.2% yield, motivated by its “long, strong and progressive” index-linked income secured to retailers The Range and Connection Flooring.
Last year was also notable for a rise in sales on prime high streets, helped by softer pricing, according to the CoStar analysis.
Buccleuch Property’s June purchase of 120 Buchanan Street from Aegon for £4.7m at a 5.8% yield reflected a decade’s worth of income to jeweller Laings at a rebased rent from January 2023. A couple of months earlier, Ediston bought 123-129 Buchanan Street from abrdn for £16m at a 7.9% yield, ending a year-long sales drought on the city’s prime retail pitch.
Although investor appetite for shopping centres remains subdued overall, the biggest retail deal to complete in 2022 was Henderson Park and Eurofund’s acquisition of Silverburn from Hammerson and CPPIB.
The £140m sale at a 9.3% yield closed in the opening months of the year. The underperforming centre was acquired for its asset management potential and wide and relatively affluent catchment of nearly two million people.
Grant Lonsdale, director of market analytics at CoStar, commented: “While transaction activity is likely to remain muted in the coming months as investors wait to see where interest rates settle and how the ongoing cost-of-living crisis pans out, Glasgow will likely remain near the top of retail investors’ shopping lists.
“The so-called Golden Z, and particularly the area around Argyle Street, is likely to be a key focus.
“Noteworthy lettings to Deichmann, H&M and Superdry have been agreed in recent months, while the City Centre Living Strategy, aimed at doubling central Glasgow’s population by 2035, is supporting a wave of build-to-rent development.”
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