Matt Galloway

On GCW's website, under Opinions, Michael Hardy's Opinion. "From Retailer to Landlord" is, with respect, nothing new. Ok, it's relatively new for entire shopping centres but not for freeholds otherwise. Long ago, British Shoe Corporation bought the freehold, as did C&A, Boots, F Hinds, John Lewis, most independent department stores, and several other multiple retailers. I used to act for Waide Pollard & Sons Ltd - until they went broke after more than 100 years - amongst their 76 branches were a few parades of shops where they occupied one or two units; the other shops let. One of my regular clients used to have some 45 branches, which, when it sold the business, kept the freeholds, a few of which it still owns. As for one-off landlords, many were owner-occupiers before selling the business on a new lease and keeping the freehold as investments. Speaking of which, where a landlord, having been the owner-occupier, grants a new lease in conjunction with the sale of the business; generally, the initial rent is based on the profitability of the business. At the first rent review, chances are that it'll be a nil increase because the initial rent was over-rented compared to the open market rent (as defined by the lease). The test of whether an initial rent is the same as the open market rent (as defined by the lease) is that if there were a rent review on the same day as the term commencement date, it would be the same rent. I've lost count of the number of ex-owner-occupiers now landlords, for whom I've acted, who've been disappointed at the outcome of the first rent review. If only, as I tell them, they'd consulted an experienced surveyor, not necessarily me, they would've been advised how to avoid nil increase. Interestingly, considering how much of a favour such tenants think they're doing, landlords whose rents are index-linked to cap and collar are likely to get at least the minimum increase. I have landlord clients - I am sure other surveyors and other professional advisers, for example, lawyers and accountants, do too - who wouldn't let their shops go to betting offices or amusement centres, or such like, because they don't approve of gambling. Fair enough, but ironic. Usually, their commercial property investment rent reviews are to open market rent. An open market rent is a gamble - a high risk - because the valuation methodology is invariably comparable evidence, which means relying on what other landlords and tenants have agreed. Where evidence is scarce or non-existent, opinion evidence is also risky because a third party whose opinion is binding under the lease might not agree.

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Despite a decline in sales performance, vacancy rates continued to decrease in the first quarter of 2024, particularly in the prime West End where rental growth reached 11.7% year-on-year. While foot traffic in the West End saw an increase compared to 2023, sales still fell short of last year's levels. International sales had a strong start in 2024 due to extended holidays, with the first week of January accounting for a significant portion of total international spend for the month. However, sales for the rest of the Quarter were lower compared to 2023, especially from Gulf countries. The decrease in sales could be attributed to Ramadan, as there was a noticeable 17% drop in sales starting from 10 March compared to the previous year. The Easter weekend also had an impact on foot traffic and spending, with Good Friday seeing the highest footfall and Saturday the lowest. It is likely that many people chose to leave the Capital for the Easter weekend. See more:

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Prime London lettings markets boosted by summer surge. JLL reports a significant increase in lettings activity in prime Central London, with average rents rising by 0.9% from Q1 to Q2 2024, reflecting a 2.1% annual growth. The JLL Prime Central London Index indicates robust demand, particularly for larger rental homes, which saw a 13.4% increase in rentals priced at £3,000 or more per week. Smaller properties also experienced strong demand, with flats rising by 16.3% year-over-year. This surge is attributed to public uncertainty before the general election and higher mortgage rates, causing buyers to delay purchases. Looking ahead, JLL notes that recent government changes have positively impacted mortgage markets, potentially leading to competitive fixed-rate mortgage offerings and increased buyer confidence, which could further elevate rental prices in the coming months. #rentalmarket #primeproperty https://lnkd.in/dpXpNU-Q

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Cracking instruction this! Prime retail investment in an incredibly sought after town. Please do get in touch with myself or Clare Cochrane if you would like any further information! Vickery Holman #retail #investment #totnes

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It’s a bittersweet moment for investors in Lok'nStore Self-Storage, the UK listed self-storage specialist. Last week the board recommended an 1110p all cash offer from Shurgard Self Storage. Whilst the premium is an attractive 12.5% above the adjusted Net Asset Value investors will mourn the loss of a first-rate next generation real estate business.   All credit to Andrew Jacobs and the team for establishing and growing Lok'nStore Self-Storage into an impressive branded real estate development and operating business. Having raised about £50mn from shareholders over the years, including a £20mn capital raise last July at 765p which the VT Gravis UK Listed Property fund participated in, they have grown this capital into a business whose equity is now being valued at an impressive £378mn.   Along the way loyal investors have benefitted from a reliable dividend stream too, last year’s increase in the annual dividend, up 10.1%, was the 12th year in a row.   With EPRA (European Public Real Estate Association) estimating that UK REITs ended March trading at a whopping -25.3% discount to Net Asset Values, versus a 10 year average discount of -15.4%, it’s easy to imagine that there may well be a few more bittersweet moments ahead for investors in expertly run next generation real estate companies.     Disclosure: VT Gravis UK Listed Property fund is an investor in Lok’nStore Group.     VT Gravis UK Listed Property fund film: https://lnkd.in/dAbbG389   #Gravis #REITs #EPRA #MegaTrends #WealthManagement #NextGeneration #NextGen #MegaTrends     Disclaimer: Capital at risk. Past performance is not an indication of future performance. This post is for information purposes only and does not constitute any form of investment advice or recommendation. For UK readership only, not intended for distribution outside of the UK.

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Today’s inflation figures for July in both UK and US came in below exceptations increasing likelihood of further interest rate cuts on both sides of the Atlantic.

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Despite a decline in sales performance, vacancy rates continued to decrease in the first quarter of 2024, particularly in the prime West End where rental growth reached 11.7% year-on-year. While foot traffic in the West End saw an increase compared to 2023, sales still fell short of last year's levels. International sales had a strong start in 2024 due to extended holidays, with the first week of January accounting for a significant portion of total international spend for the month. However, sales for the rest of the Quarter were lower compared to 2023, especially from Gulf countries. The decrease in sales could be attributed to Ramadan, as there was a noticeable 17% drop in sales starting from 10 March compared to the previous year. The Easter weekend also had an impact on foot traffic and spending, with Good Friday seeing the highest footfall and Saturday the lowest. It is likely that many people chose to leave the Capital for the Easter weekend. See more:

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There was an increase in the Prime rent in Q1 2024, taking the headline to £46 per sq ft, which would represent an increase of 8% on the previous quarter. It is anticipated that this will continue to increase into Q2 2024. Bristol continues to have one of the highest Prime rents across the UK Big 6 markets and has experienced Prime rental growth of 23% since the end of 2019. Savills latest forecasts predict that the Prime rents will grow to at least £50 per sq ft, by no later than 2026.

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The #retail #investment market is heating up nicely. Volumes were undeniably disappointing in H1 2024 (£2.23bn vs £2.89bn last time), but the tide is turning. #Investor demand is strongest for #retailwarehousing and #yields are starting to harden accordingly, although a lack of stock is holding back volumes. The pool of buyers for #shoppingcentres is the deepest it has been for 5 years. Anticipated #interestrate cuts from Sep should also see the market in better stead. #kfretail #highstreet #retailproperty #retailrealestate Charlie Barke Will Lund Dominic Walton Alastair Bird Freddie MacColl Daniel Serfontein MRICS Volkan Denli MRICS Agatha Eyston https://lnkd.in/eg64nZfx

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Great to see UK shopping centres getting thumbs up at the Financial Times. Some good commentary from Andrew Whiffin and probably the most important is the perception that values are bottoming out with new entrants appearing in the market. Our team at Lunson Mitchenall have marketed five shopping centres in the past few months and what is clear from this process that this positive news around occupational demand and the sharp correction of values is attracting a brand new wave of money to the sector. Looking forward, I'm keeping a sharp eye on what statements will be made in the coming weeks by the new government around business rates reform. A reform of this tax on occupation will have a positive impact on retailer’s outgoings, rental affordability and thus investment values. 

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The Savills UK Build to Rent Market Research Report is out for Q1 2024 and (not unexpected with recent developments) delivery in the first quarter has been slower than in other years (in the fact the slowest since 2014). However, the overall news remains positive for the Sector: 1. Renters looking into Build to Rent developments are willing to travel further in all locations (helpful graphic below) - mobility of tenants demonstrates how desirable institutionally run developments are becoming as general public awareness increases (acquisition of Homeviews by Rightmove and the recent article by Zoopla will continue to build on this); and 2. Although there has been some general slowing, there still has been 10 deals completed in Q1, with a combined value of £555 million. We also saw in Q4 of 2023, the second highest investment on record. It is important to remember that the UK’s Build to Rent stock now stands at 101,875 completed homes, up 17% nationally compared to Q1 2023. There are a further 54,814 homes under construction as well as 108,917 homes in the planning pipeline, including those in the pre-application stage. The total size of the sector currently stands at 265,606 homes, up 4% compared to Q1 2023. The Sector will (and must) continue to grow - it is important to remember that the UK's ability to deliver good quality housing will need to continue to be supported by institutional investment if we wish to accelerate delivery. Full report can be accessed here: https://lnkd.in/eiJjK-JM #BuildToRent #BTR #SFH #MFH #Residential #WBDHousing #Residential #UKHousing

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As we head swiftly towards what will inevitably be a wet Bank holiday weekend, this will leave a warm glow.......... ☀ Improved consumer confidence & a steady month on month drop in inflation has seen "take up" in retail rise sharply across the UK in the first quarter of the year Commercial real estate data provider, CoStar UK, estimate the increase in leasing activity represents a 25% uplift on the same period a year ago, a significant shot in the arm of the retail sector. Whilst the volume of activity increased, so to did the size of many of the deals concluded. Leasing activity in UK shopping centres has helped fuel the numbers with some giant's of the high street Marks and Spencer, Sportsdirect.com, B&M Retail, Frasers Group, Abercrombie & Fitch Co. & Lane7, all leasing significant space. This is exceptional news for the high street. Havwoods is a market leading, internationally recognised supplier of beautiful timber solutions, working in partnership with many of the UK's most recognisable & highly respected retail brands. Whilst our #roots are firmly in the UK, we are an international business with a global footprint & global capabilities. If you have an existing or forthcoming requirement, we will have a solution for you. Talk to me. #retail #retailsector #leasing #highstreet #highend #shopping #shoppingcentre #uk #timber #timbersolutions #surfacesolutions #flooring Kasia Lovell Ralph Simpson Lyndsey Dyson Jenson Calder Edward Eagle

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GET THE DEETS OF THE LATEST SAVILL’S UK HOUSING MARKET UPDATE. 🌱 House prices holding steady with forecasted growth 📈 Mortgage rates on the rise, but buyer confidence is up 🏠 Booming rental market with impressive growth 📈 Get the full scoop here: https://lnkd.in/es4ZKkma

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🇬🇧 Some not so big surprises, have gone bust in retail - “Intu Properties, the major property company that owns and manages some of the largest and best UK retail malls, went into administration on 26 June 2020. Many of its retail clients are not paying their rents and INTU's creditors are not as forebearing. It has total debts of £4.5bn, a merger with a European property company came to nothing and it has failed to raise more capital. Its recent negotations with other parties, where it hoped to arrange a 'standstill agreement' with its lenders, led to no useful outcome, so it went into administration. Major sites include #Lakeside, Glasgow's #Braehead, Manchester's #TraffordCentre, Nottingham's #VictoriaCentre & Norwich's #Chapelfield. This administration will be a major blow to the UK retail sector, although, coming after many other impossible-to-believe 'major blows', its significance may be less apparent. It may not be possible for the Administrators to run all the shopping centres without outside funding, although so far all sites have been kept open. It is still possible that many of their shopping centres will close unless a new potential buyer acquires some or all of them. Some observers who have used the lockdown to re-think their personal philosophy may rejoice at the decline of this bastion of consumerism. But the destruction of asset wealth in terms of commercial property, will adversely affect property prices, the stability of most retailers, pension funds, shares, unit trusts, tax revenue, job opportunities etc etc and bring home to the public the enormity of the slump we have managed to stumble into.” - “Norwich's Castle Quarter hits the market for £23.55m. Savills has been appointed by receivers to market former #Intu shopping centre #TheCastleQuarter in Norwich for offers in excess of £23.55m. Castle Quarter aerial. A sale at the asking price would reflect a net initial yield of 10% and a capital value of £61/sq ft” Also, “#EastKilbride Shopping Centre, Scotland's largest undercover shopping centre, is being offered for sale by its administrators. There are 150 shops covering a total of more than 1 million square feet of space. There are plans to reorganise the town centre involving the demolition of the nearby Centre West Shopping Centre as well as building 400 homes.” #commercial #Intuproperties #shoppingcentres #retail #malls #dominoeffect #towncentres #retailers #company #administrations #valuedestroyers #assetwealthdestruction

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According to The HomeLet Rental Index (in association with Dataloft (now PriceHubble) for October average rents in the UK stand at £1327 pcm and with London excluded they averaged £1119 pcm which up 3.4% v Oct 24 but with a slower rate of growth. The report shows too that 32.8% of income is spent on rent which is only very slightly down versus last year.

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What impact will the general election have on house prices? The pending UK general election has generated political uncertainty, which has impacted Knight Frank's property market forecasts. Specifically, they have adjusted their near-term outlook for prime central London (PCL), expecting a 1% price decline this year instead of a 1% rise initially predicted in January. This adjustment follows hesitancy in the market due to proposed reforms of non-dom rules by both the Conservative and Labour parties. However, over the next five years, Knight Frank anticipates a cumulative growth of 16.4% in PCL housing prices. For other areas such as Greater London, prime outer London (POL), and the prime country markets, Knight Frank's property price forecasts remain unchanged, being less vulnerable to political fluctuations and closely tied to economic cycles. In the broader economic context, April's inflation data has dampened hopes for a rate cut in June, affecting swap rates and the mortgage market. Despite current challenges, demand for housing is expected to rise if mortgage rates decrease in the latter half of the year, as seen earlier when rates temporarily dropped to sub-4%. In the rental market, growth forecasts for 2024 in prime London have been reduced due to a faster-than-expected normalisation of supply and demand, now predicting a 2% increase in PCL rents, down from 5.5% forecasted in January. Rental growth remains strong due to a structural undersupply of rental housing, a competitive job market, high immigration, and rising mortgage costs. Supply constraints, exacerbated by private landlords exiting due to higher interest rates and taxation changes, continue to limit the rental market. Consequently, Knight Frank expects tenants to rent longer, sustaining high demand despite marginal increases in build-to-rent supply. Overall, Knight Frank projects a 5-year cumulative rental growth of 20.4% across the UK, driven by these market dynamics. Wonder how accurate their forecast will be #propertymarket #election2024 https://lnkd.in/ewN98Cag

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