The CBRE Retail team knows retail property. Our teams cover retail agency, out of town, shopping centres, lease consultancy and capital markets as well as corporate occupier services, research and consultancy. Based in the west end of London we have an extensive team covering central London retail as well as offices across the rest of the UK specialising in local retail knowledge.
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UK GDP levels have returned to pre-Credit Crisis levels but GDP per capita levels have not. Wage inflation is still well below RPI. Until economic improvement feeds through into a sustained real increase in household incomes, shop expansion activity and shopping centre development will remain at a low ebb. Currently, a sustained recovery in consumer spending still looks to be a number of years away.
Shopping centre proposals have almost halved from 30m sq ft in 2009 to just 15.5m sq ft today. We expect the overall shopping centre development to continue contracting, falling from 48m sq ft currently to circa 40m sq ft in 2016/2017.
The current pipeline still contains a large number of shopping centre schemes that continue to be rolled-forward but that remain unviable.
Shopping centre construction levels have lifted marginally but are still at just 40% of 2007 levels. The low level of shopping centre development activity in provincial markets has resulted in acute shortages of new large-store anchor stock.
The retail warehouse park development pipeline has been in almost continuous decline since H2 2004 (a decline of just under 50%). Proposal levels have declined by over 70%.
The long-run retail park development pipeline contraction looks set to continue because of sluggish expansion activity in bulky goods market in tandem with continuing planning opposition to A1/fashion park development.
By far the largest number of schemes remaining in the pipeline currently are extensions to existing schemes, a relatively safe development option. Just 76 (24%) of schemes currently in the pipeline are entirely new parks.
CBRE's Neil Blake and Graham Barnes analyse the latest macroeconomic and capital markets factors that shape and influence commercial real estate markets in the UK, providing two views of one world.
This month in An Economist and A Financier: Optimistic summer outlook with corroborating evidence in the property market. But is there a danger of complacency? Threat from high interest, stuttering growth outside the UK, the continued weakness of public finances, weak wage growth, sluggish bank lending to companies, deflation and the lack of evidence of rental growth outside of London and the Greater South East are some of the concerns worth thinking about.