Here’s What Black Friday Says About The State Of Commercial Real Estate In The U.K.
Black Friday has become one of the most popular shopping days of the year. Amazon, one of the world’s largest online retailers, announced that its 2018 Black Friday event will be its biggest ever. The company’s sale will begin on 16 November and span a total of 10 days. As the Black Friday season fast approaches, retailers are preparing for the event.
Black Friday’s increased online sales speak to the rising trend of e-commerce across the U.K. Last year's event saw online sales rise to $1.4B (£1.1B), IMRG reported. This year, Amazon hopes to improve sales even further. In January, online sales in the U.K. overall increased 13.9% year over year.
It is a trend that has also impacted physical retail. Several High Street chains have issued profit warnings or entered administration. Popular retailer Debenhams, for example, recently announced they would close up to 50 physical stores due to loss of profits. The closure is expected to cost 4,000 people their jobs. Property owners across the U.K. will be affected by these kinds of closures, PropTech platform Datscha reported. Institutional investors and local authorities alike could struggle to find suitable tenants for buildings left vacant.
Increased online retail sales have also led to major investors like Aviva Investors and LondonMetric purchasing logistics warehouses. Industrial investment volumes accounted for 15% of total commercial property investment volumes compared with only 10% during the same period in 2017, according to Datscha’s Q3 Transactions Report.
The news is less positive for commercial retail property transactions. Investment volumes are 13% lower than they were at this time last year. Shopping Centre transaction volumes have been hardest hit at 43% lower than the same period last year. Some believe this drop has been caused by a lack of demand due to the weakening sector and a sense of caution from investors ahead of the U.K.’s withdrawal from the EU. Some local authorities are buying shopping centres to generate an income stream and provide an opportunity to regenerate their town centres.
Other owners are looking at opportunities to repurpose older centres and convert them into residential units. This approach could help solve the ongoing housing crisis in Southeast England. Shopping Centre owner Intu, for example, said it had identified space for 5,000 new homes on its land.
Despite the rise of e-commerce, physical retail is far from dead.
“Online shopping does not mark the death of the High Street,” Datscha U.K. Head of Research Lesley Males said. “Both channels can work well together. Retailers and landlords must work together to create the right proposition for their catchment market to continue to attract customers.”
This feature was produced in collaboration between Bisnow Branded Content and Datscha. Bisnow news staff was not involved in the production of this content.
