Strong Investor Demand Indicates Confidence in the Future Prospects for Suburban Retail

by Helen Boswell

Acting on instructions from Clearbell Capital, in a joint agency capacity with Gerald Eve, we are delighted to have completed the sale of their long leasehold interest in the commercial element of The Radius – a modern mixed use retail/residential property situated in Prestwich – a popular suburb of Manchester. The investment is fully occupied by nine tenants and includes a complementary blend of convenience retail from such national operators as Superdrug, Costa and Greggs together with some independent operators from the food and beverage sector including Croma and Panama Hatty. Having received five offers, the investment was sold to a locally based Property Company – David Samuel Properties – for a price in excess of £3,600,000 to show an equivalent yield of approximately 8.9%.


The Contrasting Fortunes of Retail Property

by Cheetham and Mortimer

We have just advised Savills IM on the successful purchase of Fleets Lane Retail Park in Poole. After two rounds of competitive bidding, we managed to secure a contract at a premium of 10% to the asking terms. We recognised from the outset that the desirable combination of long leases (WAULT – 12.4 years), stable tenants (Wrens Kitchens and Aldi), sustainable income (Av £17.25 per sqft) and desirable location (South of England) provided for a rare commodity that would undoubtedly generate broad interest….and it never failed to deliver on this promise. There is of course another aspect that contributed towards this outcome – it comprised retail warehousing.

This sector has emerged from the pandemic in good shape. It’s ability to adapt to the needs of convenience shopping and multi-channel retailing is apparent. In this case, the investment value is underpinned by the location and a high residual land value associated with alternative uses. Not all retail warehousing is the same and investors would be wise to remain circumspect. Nevertheless, the contrast with the High Street and Shopping Centre sectors has never been greater. Here the risks are multiple and complicated. Presently, values are deserving of a significant risk premium and we do not anticipate yields going sub 5% again any time soon….if at all.

Robert Millington. Partner. Investment. September 2021





by Cheetham and Mortimer

Prime Retail Premises NOW LET in Douglas, Isle of Man

Despite the difficult high street market, on behalf of a private investor clients Cheetham & Mortimer have managed to secure a letting to Mountain Warehouse of this prime unit.


A prominent building occupying a 100% prime trading position on pedestrianised Strand Street.

The property comprises a modern purpose built retail unit designed to provide sales accommodation and staff facilities over ground, first and second floors.

Other retailers within the immediate vicinity include Marks and Spencer, Boots, Next, New Look, River Island, JD Sports, Monsoon and TK Maxx.



Investing in the High Street is a tricky business

by Cheetham and Mortimer

A deal to purchase a town centre retail parade aborted last week. It was supposed to be a ”dead cert”. It was cheap by historic standards – just 12.5% of the investment value traded 5 years ago. The reasons for failure were multiple but they bring into sharp focus the challenges that the High Street presently faces.

Take dilapidations. Against the historic investment value, they would have amounted to 1.75% of the figure – perfectly acceptable. Now they equate to almost 15% of the investment value. In a world where investors are uncertain whether the tenant will even pay their rent, this represents a significant financial risk.

As might be expected, the overwhelming risk related to rent and occupational costs. Take one example. A lease expiry to a national multiple retailer was imminent. The tenant wants to remain (and the owner needs them to stay). The tenant has offered a rent that equates to 12.5% of the passing rent. Undoubtedly, there will be a negotiation but it sets the tone for these negotiations. There is a vacant unit. Suddenly, at these new levels, the rental income from one unit is insufficient to cover the cost of business rates on the vacant unit. If the owner faces more voids, it will soon become a zero sum game – where’s the incentive to invest? The eye catching yield is a mirage. Traditional theory dictates that the multi let nature of the investment dissipates risk – this no longer holds true.

In the short term, and despite ongoing price adjustment, the case for investing in our High Streets is far from compelling. For a start, occupiers will be forced to trade from premises where their physical condition is declining – this is not going to help ongoing initiatives to promote our town centres.

The calls for an urgent change in the Rating system will no doubt continue – but perhaps that might be the wrong thing? Are we nearly through the worse? Take the tenant that wants to renew. We were targeting a new rent that represents 25% of the passing rent. If this filters through into the Rateable Value, suddenly, the occupational costs fall to just 30% of their current level. Is this sufficient to make the High Street store profitable again? With the next Business Rates revaluation scheduled for 2022, and providing the inequitable rules surrounding tapered relief can be amended, perhaps the medium term prognosis is a little brighter. The same might not be true for those large distribution sheds that are favored by online retailers (and institutional investors). Their occupational costs are set to become a whole lot more expensive. Perhaps we should have faith that market forces will prevail? For those investors brave enough to dabble on the High Street, the need for careful stock selection will be paramount – but amongst all the rubble, there will be some gems.


Written by Robert Millington

Partner. Investment

July 2021