alternative bridging corporation

The resurgence of retail property is good news for investors

When only essential shops had been allowed to open for much of 2020 and online shopping sales rocketed to new heights, it seemed like a natural assumption to conclude that the days of high-street retail were numbered.

However, much against the odds, last year saw the sector’s resurgence. According to the ONS, retail sales volumes increased in October 2021, rising by 0.8% to a level that was 5.8% higher than their pre-pandemic February 2020 levels.

At the same time, the proportion of online retail sales fell to 27.3% — its lowest proportion since March 2020. Following lockdown, people are returning to shops and retailers are going back to physical premises to meet the demand. At Alternative Bridging Corporation, we recently completed a loan on a retail property that the agent said was in high demand, with a long list of potential buyers.

One area of demand that we have noted in the last year is the continuing strength of roadside retail; roadside premises with ample parking and sometimes even drive-through facilities.

Roadside retail has traditionally been popular with food outlets and convenience stores, but it’s broadening its appeal with brands like Metro Bank, Debenhams and Benefit Cosmetics which have embraced this model, while there are other examples of mobile phone shops, travel agents and opticians moving into this area.

The convenience of roadside retail has always been appealing to shoppers, and it lends itself perfectly to benefit from the rise of click and collect — as well as the completion of transactions with minimal interaction with other people, which is likely to be a consideration for people well beyond this pandemic.

In addition, the growing use of electric cars presents future opportunities for roadside retail, as the installation of charging points at roadside sites will create a captive audience for the shops and services at that location. And, in the UK, the limited number of sites that offer good access and visibility from the road means that demand is usually high, and this is putting upward pressure on rental prices.

So, while retail property looked to be on an unending downward spiral in 2020, the past 12 months have delivered new opportunity for investors and retailers to purchase appreciating assets. Unfortunately, many lenders have been slow to appreciate this, and it can still be difficult to secure finance on retail property with some providers. However, a specialist property lender like Alternative Bridging Corporation has the experience and understanding to recognise a good commercial opportunity, and we have continued to lend on good retail deals throughout the pandemic.

The resurgence of retail property is good news for investors and those intermediaries who partner with the right lenders. There’s opportunity out there — you just need to know where to look.

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