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It’s not just high streets that are suffering in the current, interminable economic climate. ‘Out-of-town’ retail parks – which themselves have tempted customers and money away from the town centres – are also suffering: the loss of countrywide retail-park tenants such as Borders, Comet, and Dreams, all of whom have recently gone into administration, cannot but have an effect on the bottom line of the owners and investors of the buildings. But how much of an effect?
Recent financial figures show that property giant, British Land, whose share of the market is second only to Land Securities, has seen occupancy fall to 97.4% combined with a static rental growth. Both these results point to a cause lying within the British retail property market. It is also indicated that footfall at its shopping centres has fallen by 1.5% as people stay at home and look after their pennies or try to save by shopping online.
So what is the strategy of companies like British Land? It’s not hard to predict that occupancy, footfall and rents are not suddenly about to soar back up. Instead, the company is concentrating on the West End, with its imminent links to Crossrail and relative shortage of office space – more than half the company’s property is now in the West End rather than the City. One of its success stories is the Cheesegrater building, which is 51% pre-let – well before it is due to be completed. Given that the company’s share price is pretty much the same as a year ago, and the value of its overall portfolio is up 0.5% (to £10.5 billion) it is firing ahead with projects. In March it bought Ealing Broadway’s shopping centre and it is planning further purchases before the year is out.
Tom Lax, surveyor at Morgan Pryce, believes, “This is a company that not only is affected by the economic climate but is large and influential enough to have an effect – directly or indirectly – on the market itself and the wider economic health of the capital. Its presence in London and continuing purchase power is reassuring to investors and agents alike.”
Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.