Property Market Review – June 2021
Shopping centres on the brink
In another blow to the ailing retail sector, research from Local Data Company (LDC) has revealed that potentially 70 of Britain’s 700 shopping centres are in line for demolition. In a sector already negatively impacted by the rise in online retail, rising costs and changing habits, the fact that most centres are inside facilities and lacking essential retail, has apparently contributed to their decline.
With lockdowns weighing heavily on the sector, it has been reported that 30 UK shopping centres are at least half empty, this figure includes five centres with a vacancy rate of over 80%.
Commercial Director at LDC, Lucy Stainton, commented on the findings, “There’s no doubt that the COVID-19 pandemic has exacerbated many of the challenges we were seeing across the physical retail environment, with shopping centres having been particularly exposed to categories in decline, such as fashion and casual dining.”
As many people continue to work from home, spending habits have shifted to local neighbourhoods, placing out of town centres at a further disadvantage. Some centres are set to be partly redeveloped into homes or offices, and some local authorities, including Nottingham and Stockton, are looking at demolishing centres to build parks. Centres currently scheduled for redevelopment include Nottingham’s Broadmarsh, the Chilterns centre in High Wycombe and the Riverside centre in Shrewsbury. South London’s Elephant & Castle centre is being demolished at present.
Retirement villages set to breathe life back into the high street
Traditionally located in rural gated communities, retirement villages are changing, as developers snap up vacant urban office and retail sites to construct apartment blocks for the over-65s. The number of retirees feeling lonely and isolated has leapt during the pandemic, with many people preferring to be closer to busy city centres for access to shopping, eating out and cultural venues and experiences, with good public transport links.
Local planners believe that drawing more people into urban centres, will help to regenerate and reinvigorate high streets. Property Policy Adviser at the British Retail Consortium, Dominic Curran commented, “It is a very good idea to get more people living in town centres. We also need more housing for older people over 65, and it absolutely makes sense for them to be living in urban locations. Many will move with a lot of housing equity in their pockets, which will generate spend and footfall for local shops.”
Thinktank, the Social Market Foundation, believes that retirement housing could have a crucial part to play in urban centres, especially considering the potential long-term reduced requirement for office and retail space. Over the next decade, Retirement Villages Group, backed by Axa Investment Managers, is intending to construct 5,000 retirement homes across 40 urban sites, with the firm’s Chief Executive confirming, “Our strategy going forward is urban.” In addition, in a £2bn project, Legal & General intends to build 3,000 UK city centre retirement residences, on former Homebase stores in Bath and Walton-on-Thames, on a former hospital in Epsom, and in its first London project, on the site of a retail warehouse in Uxbridge.
Growth in hotel market
The latest UK Hotel Dashboard from Knight Frank has noted that the pace of business in the sector increased in April. Open hotels in the capital registered a 47.9% rise in monthly total revenue per available room (TRevPAR), with growth of 21.6% recorded by regional hotels. Market resilience was further verified in April, with revenue per available room (RevPAR) growth rising to over 60%, driven by a 14% rise in occupancy to over 42%.
Commercial property currently for sale in the UK
- Regions with the highest number of commercial properties for sale currently are the South West and North West of England
- Northern Ireland currently has the lowest number of commercial properties for sale (22 properties)
- There are currently 1,281 commercial properties for sale in London, the average asking price is £1,479,807.
Source: Zoopla, data extracted 20 May 2021
|Region||No. properties||AVG. asking price|
|South East England||1,168||£2,038,732|
|East of England||727||£624,240|
|North East England||778||£392,246|
|North West England||1,457||£437,153|
|South West England||1,621||£550,110|
|Yorkshire and The Humber||1,150||£334,067|
|Isle of Man||50||£461,187|
Commercial property outlook
Investment enquiries – broken down by sector
- The headline net balance for investment enquiries rose to +4% in Q1, following a reading of -12% last quarter
- This is the first time the indicator has been in positive territory since Q3 2018
- The industrial sector posted a net balance of +59%, against readings of -18% and -44% for the office and retail sectors respectively.
Source: RICS, UK Commercial Property Market Survey, Q1 2021
Capital value expectations – broken down by sector
- Capital value expectations remain firmly negative for office and retail
- But projections for office and retail are less downbeat relative to where they stood at the end of last year
- Capital value expectations moved further into positive territory for multifamily residential, data centres, and aged care facilities.
Source: RICS, UK Commercial Property Market Survey, Q1 2021
All details are correct at the time of writing (17 June 2021)
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