National Investment Market Overview
Alternative focus: Automotive market
Overview
In a sector where transactions have been relatively scarce for the past 12 months, Q2 saw a flurry of deals in the automotive sector. Allsop sold two Audi car showrooms let to VW for circa 9 years for £12.5M in Nottingham and Bury-St-Edmunds reflecting yields of 7.25% NIY and 6.85% NIY respectively. A further purpose built Audi in Edinburgh was sold for circa 7.5% / £9.1M with just over ten years on the lease to VW. These long let automotive investments are now providing more attractive returns to investors compared to 24 months ago, in the most part due to the costs of finance, which has opened up the sector to new entrants who were unable, or unwilling, to invest at the previously low yields on offer.
Retail Warehousing
Overview
Despite increased positive sentiment in 2024, transaction volumes in the UK retail warehousing market remain sluggish, primarily due to elevated debt costs. Transaction activity in Q1 was down 33% compared to the long-term average, and Q2 has exhibited a similar trend. However, inflation levels have nearly returned to their summer 2021 levels, leading to a clear downward trajectory and a subsequent improvement in consumer confidence. After two consecutive years of decline, retail sales volumes are forecasted to grow in 2024.
Industrial
Overview
The industrial market is demonstrating continued resilience as we move into the second half of 2024, with demand holding steady despite the broader economic challenges. While take-up has moderated from the exceptional levels seen during the 2020-2022 period, which were driven by pandemic-specific requirements and accelerated changes in global supply chains, it remains robust.
High Street Retail
Overview
Investment volumes continue to be below expectations at £230M for H1 2024, 60% lower than the 10-year average, primarily due to a scarcity of larger properties. Prime yields have stabilized at 7%, indicating downward pressure due to competitive bidding processes. Despite lower transaction volumes, the market dynamics are shifting as the shortage of available properties drives the market, rather than a lack of buyers.
Offices
Market Overview and Last Quarter's Activity
The South East office market demonstrated resilience in Q2, with investment volumes reaching £363M across 22 transactions. This figure represents a moderate increase from Q1 and aligns with the median level for second quarter volumes over the past five years.