2023-05-12-莱坊-Retail_Warehousing_Monitor_Q1_2023_2页_847kb

Retail Warehouse Dashboard Summary - Q1 2023

Core Content Overview

This summary provides a concise quarterly synopsis of activity in the UK retail warehousing market for Q1 2023, highlighting key trends, performance metrics, and market dynamics.

Key Takeaways

• Market Sentiment: The RICS Commercial Property Sentiment Index showed an improvement in CRE market sentiment, rising from -15 to -11 points, though it remains in negative territory.
• Investment Volumes: Investment volumes increased by 31% compared to Q4, totaling £659 million, which is above the 5-year quarterly average.
• Buyer Breakdown: UK Institutions were the largest buyer segment, acquiring 61.8% of all deals by volume, approximately £400 million.
• Yields: Prime and Secondary yields remained stable at 6.00% and 7.50% respectively, driven by capital growth (+0.7%) and rental growth (+0.4%).
• Vacancy Rates: Unit vacancy rates decreased by 30 basis points to 8.7%, significantly lower than the All Retail rate of 13.8% (SC 17.8% / HS 13.8%).
• Footfall: Footfall levels lagged slightly in January but remained generally strong compared to the wider UK Retail market, though still below pre-pandemic levels by -5.3% in March.
• Retail Sales Growth: Retail sales continued their growth trend, increasing by +5.6% YoY. Grocery sales saw a stronger acceleration at +10.1%, outperforming Non-Food (+4.1%), driven by double-digit grocery inflation.
• Sector Performance: Sector performance was mixed, with growth in some areas (Clothing +13.3%, Furniture +5.2%) and softening in others (Electricals -12.2%, DIY -2.9%).

Key Deals YTD (Year to Date)

Market Trends and Analysis

• Rental & Capital Growth: Rental and capital value growth showed positive QoQ changes, indicating a recovery in the market.
• Yields: Yields have seen some compression at the prime end of the market due to increased institutional activity and sharper pricing strategies.
• Supply and Demand: While investment demand has surged, the limited supply of quality stock has constrained deal volumes. This is expected to continue as buyers focus on efficient and ESG-compliant assets.
• Investor Interest: Retail warehousing is increasingly viewed as an attractive asset class for investment, offering better returns than other CRE sectors and providing exposure to retail without the complexities of traditional retail environments.

Contact Information

• Dominic Walton
  Partner, Capital Markets
  +442078611591
  dominic.walton@knightfrank.com

• Daniel Serfontein
  Associate, Capital Markets
  +442036407037
  daniel.serfontein@knightfrank.com

• Josh Roberts
  Surveyor, Capital Markets
  +44 20 8187 8694
  josh.roberts@knightfrank.com

• Freddie MacColl
  Partner, Capital Markets
  +44 2039 677 133
  freddie.maccoll@knightfrank.com

Research Team

• Stephen Springham
  Partner, Head of Retail Research
  +442078611236
  stephen.springham@knightfrank.com

• Emma Barnstable
  Senior Retail Research Analyst
  +442081061385
  emma.barnstable@knightfrank.com

Additional Resources

• Footfall Data: Footfall levels for All Retail and Retail Parks are available and show monthly changes compared to 2019 levels.
• Vacancy Rate Data: Vacancy rates for All Retail and Retail Parks are also available, providing insights into market conditions.
• Knight Frank Research Reports: Available at knightfrank.com/research for further analysis and insights.

Market View

Freddie MacColl highlights that the sector is performing well, with top-performing categories showing strong sales growth YoY. The continued focus on efficient and ESG-compliant assets is expected to shape the market in the coming quarters.