UK supermarket investment has increased by 20% year-on-year in the first half of 2017, representing £727 million worth of transactions, according to data from Colliers International.
“Despite subdued retail investment activity generally, the food store market has recovered a large amount of ground and is proving increasingly popular with investors," said James Watson, head of retail capital markets at Colliers International.
He added that confidence has returned to the sector, with retailers beginning to open new stores again, and Colliers expects transactional volumes to be "well ahead" of last year.
"The grocery market is proving particularly resilient to the general uncertainty of digital retailing, with the Amazon/Whole Foods tie up being seen as a positive indicator that disruption by online operators is potentially more limited."
Collier's International is anticipating more institutional activity in the second half of the year, although lack of prime stock 'will continue to be an issue'.
“There is still no sign of rental growth outside London, but we are starting to see some signs of stability in the occupational markets," said Watson. "Average lot sizes are lower and institutions in particular are acting with caution and being selective on income and assets."
“Recent deals we have transacted have seen a significant depth of interest and pricing closing ahead of quoting terms, all of which point to a decent second half in 2017. Investors are continuing to seek out the stability that long-dated income from sound covenants offers, which is symptomatic of the wider political and economic picture in the UK at present.”
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.