They may be blamed for sucking the life out of the traditional high street, but Britain’s out-of-town shopping centres are proving a boon to property investors, new research suggests.
CBRE’s latest prime rents and yields monitor shows the value of such centres rising by 6 per cent in the third quarter of this year, marking the second steepest increase since 2000.
Their capital appreciation dwarfed the 3.8 per cent growth in values for in-town shopping malls, echoing a growing demand for “large, dominant destinations”, according to the commercial property consultancy.
Rents also grew strongly in out-of-town centres, rising 2.1 per cent, but even this was insufficient to keep pace with growing property values. As a result, yields were pushed down to 4.5 per cent, their lowest level since 2000, making these sites increasingly attractive for investors looking to lower their exposure to risk.
Elevated by these out-of-town figures, the overall shopping centre sector saw capital value growth of 4.5 per cent and rental growth of 1.6 per cent in the quarter, the highest across all prime commercial property sectors, which averaged 2.2 per cent and 1.1 per cent respectively.
The popularity of shopping centres appears to have come at the expense of high street shops as property values in the rest of the retail sector grew by just 2.2 per cent, a figure buoyed by strong capital value growth in central London of 5.5 per cent, the research noted.
Natasha Patel, associate director at CBRE Research, said: “On the whole, we saw fairly modest capital value growth in Q3, but both rents and capital values in out-of-town shopping centres have grown remarkably.
“This rental growth is largely due to continued demand from retailers who are placing greater emphasis on dominant centres to strengthen their brand presence.
“The performance of these out-of-town sites has also contributed to a strong showing for shopping centres as a whole, pushing average yields in the sector down to their lowest levels in 15 years.”
Meanwhile, one of Glasgow’s biggest business parks yesterday outlined plans to expand, signalling an upturn in business confidence in the city. If fully let, the additional space could house hundreds of workers.
The owner of Spiersbridge Business Park is to offer an additional 70,000 square feet to 26 new tenants in mixed office space and industrial units.
The park already accommodates 44 businesses in three office pavilions, three industrial units and a 26,000sq ft “industrial terrace”.