Hammerson is exhibiting growing confidence in the retail park sector, following its£192 million takeover of warehouse specialist Grantchester.
Chief executive John Richards said he believes rents across the former Grantchester retail park portfolio are 16 to 17 per cent reversionary and can be driven up from£134.50 per sq m to around£161 per sq m.
Scarcity of space and strong demand is likely to bolster the fortunes of retail park operators. Out-of-town retailers' high-quality management is also seen as feeding through into retail park rents. Richards said: 'Undoubtedly, there are some very good retailers running out-of-town businesses, and that is giving the opportunity for rental growth.'
Supply chain efficiencies have yet to be pursued as vigorously in the bulky goods sector as other retail areas, raising the prospect of a further rent fillip. 'Bulky goods businesses have been slower to exploit supply efficiencies that high street stores have been able to capture in recent years,' said Richards.
As a consequence, Hammerson is looking to maintain Grantchester's solid performance, regularly 2 per cent above the retail warehouse IPD benchmark.
Around 25 key staff from Grantchester will be retained by Hammerson, including development director Nick Alford.
Hammerson made its first move into retail parks two months ago with the£57.7 million acquisition of Parc Fforestfach in Swansea. It has been attracted to the sector by the rapid turnover that retail parks provide, which will act to balance the long timescale associated with city centre development, said Richards.
Up to£100 million will be invested in ex-Grantchester parks at Bridgend and Merthyr in South Wales and in Gloucester, subject to permission.
Hammerson is also looking to capitalise on France, with investment of up to£200 million in French retail warehousing in coming years.