Convenience retail property market remains resilient despite cost pressures

The convenience retail property market has remained resilient in the first half of the year, despite the inflationary cost pressures facing businesses over the period, a new report has found.

The mid-year review by the specialist business property adviser Christie & Co demonstrates that convenience stores (53.21%) and petrol filling stations (18.35%) have made up the lion share of its instructions.

Other types of retail businesses sold or brought to market by the firm so far in 2022 include garden centres, dessert shops, marinas and a specialist fishing tackle store!

Key market insights from the review include:

• Buyer appetite for retail assets has not been dampened by the challenging economic backdrop.
• Business prices are holding up due to the weight of ongoing buyer demand. However, deal times are longer as buyer due diligence is protracted, particularly if there is a requirement to borrow.
• Across the industry, larger operators continued to churn their portfolios and focused on acquiring new stores in key markets, which provided a fantastic opportunity to the wide pool of independent buyers still seeking sites. Notably, the quality of assets has become a key consideration due to increasing operational costs.
• The significant increase in the cost of construction materials has caused the multiples to rethink their new store roll-out programmes, which is a cause for concern for developers and investors. Thankfully there remains a steady stream of ‘acorn operators’ likely to ‘grow into oak trees’ who we can put forward for these opportunities.
• In the retail investment market, sentiment remains positive, and yields remain stable, but reflect the quality of location, property and occupier covenant.

“Our collective experience during uncertain times means we are superbly placed to convey our market intelligence to the maximum benefit of business owners,” Steve Rodell, managing director – retail at Christie & Co commented.

“Even if a sale is not currently under consideration, we can provide valuable guidance on how to navigate the challenges being faced by retailers right now. The pool of buyers remains active and whilst some players might be absent for now, there’s a queue of others ready, willing and able to make an investment in our robust sectors.”