Industry news

Is the UK turning into a nation a shed-keepers?

For a supposed ‘nation of shop-keepers’, the UK real estate market seems alarmingly pre-occupied with sheds of late.

Despite the recent headwinds in the retail market, news this week that @Prologis has acquired a retail park in north London for conversion to an urban logistics facility certainly raised some eyebrows. But the world’s leading supplier of logistics space has a well-earned reputation as one of the market’s most sophisticated investors and shrewdest innovators and, where it leads, others are likely to follow.

“This deal is the starkest sign yet of the contrasting fortunes of the two sectors”, according to analysis from React News

Given the march of e-commerce and Brits’ seemingly insatiable demand for home delivery, a surge in demand for last-mile logistics space is hardly surprising. The same growth in e-commerce, allied with a decline in car ownership in urban locations has also has a similarly unsurprising impact on the fortunes of the out-of-town retail sector. Prologis has been quick to work this trend in its favour by striking a deal precisely at the axis at which retail values are at the trough of a downward trajectory and logistics are heading way back up the curve. On this basis, the re-purposing of ‘analogue’ retail assets into more ‘digital’ logistics assets makes perfect sense and is certainly a trend to watch out for.

However, discrepancies in values will always make these deals challenging and it is unlikely to become a blanket solution across and it is unlikely that the majority of the UK’s retail parks will be converted into logistics parks.

It is more likely that we are moving to a more sophisticated investment model that is beginning to break free from the traditional silos and apply creative thinking and relevant solutions where individual assets are concerned. @IngkaCentres recent acquisition of the King’s Mall in Hammersmith is another example of innovative thinking, which will deliver a major transformation to a mixed-use destination anchored by London’s first @Ikea city store.

With the pace of change in consumer demand at its most rapid ever, the real estate community is often accused of failing to keep pace. These two examples alone show that there are plenty of players, who are adaptable enough  to respond to these changes and to be a catalyst for further positive change. As we head into 2020, the market has arguably never been a more interesting place in which to work.

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