Investors return to retail parks

Prime retail warehouse yields begin to attract opportunistic investors back to the market

Opportunistic investors are returning to the prime retail warehousing sector, enticed by yield levels which now balance the potential risks inherent in UK retail with the rewards of moving ahead of the wider market, according to new analysis from Savills.

Yields on open A1 retail warehouses currently stand at 6%, having risen from 5% a year ago and 175 basis points since 2015. However, increasing demand signalled by a spate of recent deals in Bath, Basingstoke and Brighton indicate that yields on high quality stock may move inwards in the future, Savills said in its latest Market in Minutes report.

James Gulliford, joint head of UK investment at Savills, said: “The investors currently buying prime retail warehouses appear to have a sound approach, and are not merely being driven by the prospect of picking up a bargain. We believe retail warehousing is the segment of the UK retail sector most defensive against the structural change of omni-channel retailing, largely being home to retailers selling products that customers want to inspect before buying, and are therefore unlikely to see the same issues emerge as high street retail.”

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