Colliers predicts wave of consolidation among landlords and occupiers will continue
In Colliers’ annual predictions for the UK property market head of UK retail Mark Phillipson said: “Throughout 2017, we have witnessed numerous large-scale acquisitions across the retail sector from Tesco-Booker and Amazon-Wholefoods through to the Hammerson-Intu and Westfield-Unibail-Rodamco deals and the repercussions will continue to take effect and crystalize in 2018 onwards. We anticipate more consolidation of physical stores across the marketplace and retailers looking to the future of their business should see the advantages of this, particularly when considering their cost base and financial strategy moving forward.
“In addition, we predict more CVA’s and restructuring is on the cards for occupiers, particularly department stores which are facing current challenges and risks, especially since online retail shopping verged into the mainstream, which has subsequently had a direct negative impact on sales and footfall.
“We also predict there will be more pressure on pricing in the secondary shopping centre investment market leading to further sales.”
And in the leisure sector, Colliers’ head of UK leisure agency Ross Kirton predicted: “The cooling of the casual dining sector could potentially impact the development pipeline, particularly in secondary locations.”
He explained: “The casual dining sector is likely to undergo further structural change at group level with further casualties; those that succeed will be due to them placing more emphasis on service and experience. This is likely to lead to a broad stabilisation of rents and we anticipate the performance gap between average and prime locations to widen, with the best prime pitches still to enjoy rental growth.
“We expect experience-led activities to take centre stage in 2018 and this sector will continue to grow in major urban locations. In addition, Street Food and Food Halls will become an integral components of the leisure mix in mixed-use developments.”
We predict that turnover leases will become more prevalent in the regions. As occupiers seek to reduce exposure to fixed costs, we expect an increase in tenants taking on units on a turnover rent basis in order to share the risk.”
