2025-05-02-莱坊-Retail_Monitor_Q1_2025_2页_1mb

UK Retail Monitor - Q1 2025 Summary

Core Content

The Knight Frank Retail Monitor provides a quarterly analysis of the UK retail sector, focusing on consumer and occupier markets, as well as investment and capital markets. The report highlights a generally positive trend in Q1 2025, with strong consumer spending and stable occupier conditions, despite ongoing macroeconomic challenges and upcoming cost pressures.

Main Points

Consumer Markets

• Positive Spending Power: Consumer spending power improved in Q1 2025 as inflation eased and wage growth outpaced inflation.
• Retail Sales Growth: Retail sales increased by 2.9% in value and 2.0% in volume for the quarter, surpassing pre-pandemic levels in several UK regions.
• Consumer Confidence: Confidence in personal finances remained stable at around +1pt, while views on the wider economy were -29pts, indicating continued concerns.
• Inflation and Earnings: CPI inflation was 2.6%, and average weekly earnings rose by +5.6%, contributing to stronger consumer spending.

Occupier Markets

• Stable Conditions: Occupier markets remained stable with minimal distress, although some retailers, like H&M and B&M, underperformed.
• Cost Pressures: Retailers are set to face increased costs from April, including higher National Insurance Contributions (NICs), minimum wage rises, and reduced business rates relief.
• Expansion Plans: Several retailers, including Mango, Abercrombie & Fitch, Superdrug, and Vagabond, announced expansion plans, contributing to a 10bps decline in vacancy rates to 15.1%.
• Rental Growth: Rental growth strengthened, exceeding +1% for five consecutive months, driven by retail warehousing and shopping centres.

Investment Markets

• Investment Activity: Q1 investment volumes totaled £1.3bn, below the five-quarter average of £1.8bn, but showed signs of recovery after a prolonged decline.
• Sector Breakdown: Retail Warehousing accounted for 68% of investment volumes, followed by Foodstores (19%) and High Streets (11%). Shopping centres saw minimal investment, contributing just 2%.
• Capital Value Recovery: After 24 months of decline, capital values began to grow, with March 2025 recording +3.6% growth.
• Yield Compression: Yields in Prime High Streets and Foodstores showed 25bps compression, indicating a re-pricing of assets based on improved cashflows.

Key Information

• Consumer Confidence: Remains weak but stable, with a focus on personal financial situations rather than overall economic optimism.
• Occupier Distress: Limited to repeat offenders and online pureplayers, with most retailers performing well.
• Investment Trends: Retail investment is shifting towards warehousing and foodstores, while shopping centres remain underactive.
• Rental Growth: Strong and sustained, with retail warehousing and shopping centres leading the trend.
• Capital Markets: Positive signs of recovery, with capital values growing for the first time in over two years.

Visual Highlights

• Retail Vacancy Rate: Declined by 10bps to 15.1%.
• Rental and Capital Value Growth: Both showed upward trends, with capital values growing +3.6% in March.
• Yields: Compressed in Prime High Streets and Foodstores, signaling a shift in market valuation.

Conclusion

Q1 2025 marked a turning point for the UK retail sector, with consumer markets showing resilience and occupier markets remaining stable. While investment activity was subdued compared to historical averages, capital values began to recover, suggesting a more optimistic outlook. The sector is gradually adapting to new cost pressures, with a focus on cashflow resilience and strategic expansion.