Shop Norwich:

In February we reported on a development in the hotly contested shopping mall wars in Norwich.  Chapelfield Shopping Centre has been attracting many of the new retailers coming into the City, at the expense of the other shopping destinations and our report on Valentine’s Day related to the recent signing by Boux Avenue, the lingerie retailer.  The pressure has continued and the Castle Mall, which was once Norwich’s premier shopping destination has been sold, primarily due, we understand, to underperformance for the owner.

Capital and Regional have disposed of the shopping centre for £77.3 million to refocus its Mall Fund towards its primarily London based assets.  The new owners are Infrared European Active Real Estate Fund, who are making their third acquisition in shopping centres since returning to the sector last year.  The Galleries in Bristol and St john’s in Liverpool were acquired during last year.   Chris Huxtable, Director at InfraRed said “we plan to add considerable value to the centres through additional investment”.

The Castle Shopping Mall occupies an iconic location in the City, being built directly underneath Norwich’s 12^th Century Norman castle.  With 33,000 m² of lettable space and 80 units and an 8 screen multiplex cinema InfraRed has an ideal opportunity to take advantage of Norwich’s 10^th place UK ranking in retail market

It will be interesting to see if capital investment will help return it to its former position as the City’s premier shopping destination.

Take stock and review

The commercial property sector is to come under further pressure during 2012 in the light of the current economic climate and the uncertain times ahead for the Euro Zone.  Both rental and capital values started to show sign of weakening during the Q4 last year and are expected to continue to decline during 2012 as the continuing uncertainty over the future of the British recovery continues.  Tough market conditions in the retail sector have led to have affected high streets across the country.  Even the usually resilient London market is starting to show significant stress with rental levels and capital values starting to decline as the number of potential transactions slows.

However, all is not lost!  With the decline in value for the landlord comes the increase in opportunity for the tenant.  Now is the ideal time to undertake a comprehensive review of all your lease and occupancy arrangements.

• Are you able to exercise any lease breaks?
• Are any leases up for rent review?
• Are you holding over?
• Have your business needs changed?
• Is your occupancy at the optimum?
• Could you place any non essential requirements in better value accommodation?
• Is there an opportunity to outsource activities?

Every cloud has a silver lining, see what lies behind this one for your business.

Innovation@jaltd.co.uk

Food Fight!

There are few sectors in British retailing that rival the cut throat nature that is to found amongst the players in the food retailing sector.  Famously robust with suppliers and heartless with each other, the big four retailers continue to battle for their share of the UK’s £150+ billion grocery shop.

Competition is fierce; Tesco, the UK’s biggest retailer with over 2,700 stores is said to be losing ground to its competitors.  Even though special sales promotion campaigns have seen an increase in footfall, revenue has fallen.  Following years of aggressive acquisition of new sites for superstores and its branded Tesco Local the recent promotion of Kevin Grace, its UK Property Director since 2006 to Group Commercial Director, has perhaps signalled an end to that phase of the giant’s growth.

Northern retailing heavyweight, Morrison’s, continues it drive into the south with at least nine new superstores opened in the last quarter.  It will continue to catch up with the competition in the convenience store battle, only two opened so far this year.  A new regional distribution facility at Bridgwater will pick up load though the next quarter.

J Sainsbury has a healthy profile at this point with profits showing a 7% increase to nearly £400 million.  Having been acquisitive in their portfolio development they have added 596,000 sq ft of new space, including seven new stores, 15 extensions and 37 convenience stores, which bring the convenience stores total to 400.  Their property value has increased to an estimated £10.9 billion, as at 1 October 2011.  Yield has remained stable at 4.9%.