2025-05-06-莱坊-Retail_Warehousing_Dashboard_Q1_2025_2页_835kb

Retail Warehouse Dashboard Summary - Q1 2025

Core Content

The UK retail warehousing market experienced significant activity in Q1 2025, with investment totaling £881 million, surpassing the 5-year quarterly average of £746 million. This follows a record Q4 investment of £1.8 billion, indicating a sustained interest in this sector. Retail warehousing accounted for 68% of total retail investment, highlighting its role as a key driver in the broader retail capital markets.

Key Takeaways

• Investor Demand: The RICS UK Commercial Property Monitor reported an increase in investor demand, with a net balance of +4%, up from -4% in the previous quarter.
• Investment Volumes:
  • Q1 investment reached £881m, marking a strong performance.
  • Listed PropCos contributed 49.2% of the total deal volumes, with Institutions accounting for 37.5%.
• Yield Trends:
  • Prime yields for Open A1 and Bulky Goods Parks converged at 5.50%.
  • Secondary Bulky and Open A1 yields saw a compression of -25bps, reaching 6.75%.
• Vacancy Rates:
  • Unit vacancy rates in out-of-town retail improved by -10bps to 6.4%, the lowest since 2018.
  • Vacancy rates are now approximately -190bps lower than pre-pandemic levels.
• Footfall Trends:
  • Retail Park footfall increased by 7.9% in January, significantly outperforming the broader retail sector, which saw a 2.0% increase in February and a -1.2% increase in March.
• Retail Sales Growth:
  • Q4 retail sales grew by 2.9%, with Non-Food categories showing stronger performance (+3.7%) compared to Food (+1.8%).
  • Certain out-of-town categories, such as Carpets (+22.4%), Sports Equipment and Toys (+14.7%), and Garden Centres & Pets (+6.0%), experienced notable value growth, while others faced deflationary pressures.

Key Deals YTD (Year to Date)

Market Trends

• Rental & Capital Value Growth:
  • Both rental and capital value growth saw a quarter-on-quarter increase of +0.6%, but this marked a slowdown from the previous quarter's +2.3% and +0.8% growth.
• Occupier Demand:
  • Occupier demand remains strong, with rental growth reaching +2% monthly, the highest since 2007.
  • Leasing intent is robust, with major retailers like Screwfix, Superdrug, and Matalan expanding their presence in retail parks.

Research Commentary

The market's resilience is attributed to the simple operation and strong performance of retail warehouse formats. Despite global economic uncertainties, investor confidence remains solid, reflected in the yield trends and continued demand for prime spaces. While the rate of improvement in unit vacancies has slowed, the overall trend is positive, and the expansionary strategies of key operators suggest sustained pressure on prime space.

Contact Information

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

• Daniel Serfontein
  Partner, Capital Markets - Out of Town & Leisure
  +442036407037
  daniel.serfontein@knightfrank.com

• Volkan Denli
  Surveyor, Capital Markets
  +44 20 7861 1051
  volkan.denli@knightfrank.com

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

• Josh Roberts
  Senior Surveyor, Cap Mkts
  +442081878694
  josh.roberts@knightfrank.com

• Stephen Springham
  Partner, Head of Retail Research
  +44 20 7861 1236
  stephen.springham@knightfrank.com

• Emma Barnstable
  Associate, Commercial Research
  +442081061385
  emma.barnstable@knightfrank.com

Additional Resources

• Footfall Trends: Monthly YoY changes in footfall for All Retail and Retail Parks are available.
• Vacancy Rate: Unit vacancy rates for All Retail and Retail Parks are monitored and reported.
• Reports: Knight Frank Research provides quarterly dashboards and weekly Retail Notes. Reports are available at knightfrank.com/research.