2013 – Investment Market Overview

Throughout 2013 there were signs of an improving investment market across all sectors, aided in part by an influx of distressed sales.

The retail warehouse investment market has shown signs of improvement as limited supply translates into keener yields. Silverlink Shopping Park in North Shields sold for £131 million (5.35% NIY) and the bulky goods Admiral Retail Park in Eastbourne sold for c. £25 million (6.2% NIY). For solus units, the Furniture Village (Open A1) on Purley Way sold for £15 million (5.8% NIY) and DFS in Thanet transacted for £4.8 million (7.2% NIY).

Turning to the industrial sector yields remain stable at c. 6.0%-6.25% for the best distribution sheds, with lower yields achievable for long dated, secure income streams popular with institutions and international investors. For example, Aviva acquired a pre-let of a 669,000 sq ft distribution facility on Magna Park, Milton Keynes, for £74.2 million reflecting 4.9% NIY, for 30 years of John Lewis income with annual RPI reviews.

For shorter income in key regional locations, yields achievable are substantially higher. At Newcastle-Under-Lyme, 10 years of Smyth Toys income sold for £20.7 million, 7.5% NIY. Elsewhere, at Trafford Park, Manchester, a 179,000 sq ft unit let to Kuehne & Nagel, let off c. £4 per sq ft with five years to tenant break sold at c. 7.9% NIY. A ten year old distribution unit in Croydon, let to St Gobain with 15 years unexpired at £7.65 per sq ft, is currently being marketed at £10 million, 6% NIY.

Closer to home, through 2013 Johnson Tucker successfully acquired a number of investment opportunities including; Npower Investment in Peterlee, a high street Tesco and Greggs investment, Iceland in North Shields as well as a Lloyds Pharmacy investment in Cramlington, a Costa Coffee in Richmond and a Greggs investment in Forest Hall. All positive signs, a trend which will hopefully continue into 2014.

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