GVA - Retail Bulletin Summary

After healthy year-end retail figures, and a grand finale of UK consumers fully embracing US phenomena Black Friday and Cyber Monday, commercial property consultants GVA take a look at the retail sector’s achievements in 2014 and predictions for the next twelve months.

The bulletin reveals that West End property is becoming increasingly popular in the retail sector, particularly with international retailers, with brands such as Ecco, Omega, and Bershka (to name a few) paying premium prices for retail space within London’s prime zones.

The newest developments for GVA include the new ownership of the 27,000 sq ft West One shopping centre (377 Oxford Street), bought by Middle Eastern toy retailer ‘The Toy Store’. Other developments in the area include proposals of an 18,000 sq ft Matalan and a highly anticipated Ralph Lauren on Regent Street set for 2015.

In 2014, GVA joined with Nash Bond on the leasing of the multi-use development Mailbox, Birmingham, and embarked on a £50 million refurbishment. GVA’s marketing strategy aims to target high-end, boutique and independent retailers, and already has a 45,000 sq ft Harvey Nichols signature store set for completion this spring.

After merging with Bilfinger Real Estate (BRE), GVA showcased their prospects at MAPIC in November 2014. Working alongside other international investors, retailers, developers and agencies they presented to a broader market, widening the opportunities as retailers continue to seek the premium spaces.

The bulletin highlights the rising demand for retail space across Europe. In Spain, the demand is growing for high-end flagships in prime city locations with growth anticipated to be between 1% and 1.3 %, despite the economy. Germany is also in the spotlight as they continue to withstand the Eurozone crisis with a strong retail potential of £400 billion forecasted by 2018.

In terms of retailers who rent, the bulletin addresses the advantages and disadvantages of leasing in the UK and Wales, focusing on 10 year terms with a tenant break and 5 year fixed leases.  Both are certain for 5 years and the article references the positive and negative attributes to both, depending on the markets and needs of both the tenant and the landlord.

It is recognised that some retail sectors will continue to face challenges. The rise of e-commerce in the digital age has meant that virtual shopping has overtaken physical shopping.

 In response, GVA’s property management team take a look at how retail outlets can continue to draw in occupiers. 
At the top of their list is a good mixture of tenants, stating ‘shops which complement each other will attract like-minded customers’.  This is followed by the importance of the shopping centre, not only as a retail outlet, but as a brand in its own right.

They encourage the use of both traditional strategies and modern marketing channels, i.e. the internet and social media – seeing the effects first-hand: 'Our tenants have reported on a number of occasions that customers have visited their stores to buy the items that they have seen on our social media pages.'

Additionally GVA’s bulletin approaches sustainability as an ever-evolving term, differing in relation to each retail business, yet a vital concern for all. The bulletin states that it is ‘impossible to ignore’ due to the increasing number of ‘regulatory obligations…and occupier demand’.

Furthermore GVA see sustainability as a key driver of investment performance – with their Green to Gold survey showing that 58% of UK fund managers and investors are now categorizing it as essential, as oppose to ‘nice to have’.