Town centre retail property will face conflicting pressures this year, according to King Sturge. Price deflation could also force some retailers into accelerating their store openings in order to generate sales growth.
King Sturge head of retail Charles Miller said: 'Price deflation is still a reality in non-food, especially clothing and footwear. The City's growth expectations will press quoted retailers to expand to compensate for the lack of like-for-like sales growth.'
However, at the same time the supply of new retail space is severely restricted. King Sturge forecast that the limited development pipeline will place pressure on expansion-minded retailers, resulting in increased rents in prime locations. Prime rents grew by 2.3 per cent last year, down from 2.9 per cent in 2002, and King Sturge expects continued growth this year - albeit at a slower rate of 1.2 per cent.
This will again help retail to be the best-performing property sub-sector.
King Sturge forecast retail will deliver a total annual return of 10.5 per cent in the coming year.
No comments yet