The convenience retail property market remained resilient despite the inflationary cost pressures facing businesses over the past six months, according to specialist business property adviser Christie & Co.
Christie & Co’s Retail: 2022 Mid-Year Insight, which reflects on market activity in the first half of the year and provides an outlook for the second half, reveals:
- Buyer appetite for retail assets has not been dampened by the challenging economic backdrop.
- Business prices are holding up due to the weight of ongoing buyer demand. However, deal times are longer as buyer due diligence is protracted, particularly if there is a requirement to borrow.
- Across the industry, larger operators continued to churn their portfolios and focused on acquiring new stores in key markets, which provided a fantastic opportunity to the wide pool of independent buyers still seeking sites. Notably, the quality of assets has become a key consideration due to increasing operational costs.
- The significant increase in the cost of construction materials has caused the multiples to rethink their new store roll-out programmes, which is a cause for concern for developers and investors. However, there remains a steady stream of ‘acorn operators’ likely to ‘grow into oak trees’.
- In the retail investment market, sentiment remains positive, and yields remain stable, but reflect the quality of location, property and occupier covenant.
The review suggests the key focus for retailers in the coming months will be to retain the ‘lifeline’ customers that they gained during the pandemic, turning them into ‘lifelong’ customers.
Steve Rodell, Managing Director – Retail, said: “The pool of buyers remains active and whilst some players might be absent for now, there’s a queue of others ready, willing and able to make an investment in our robust sectors.”
