Average retail property prices took a tumble last year, plummeting by 3.6% in 2011 following the 2.1% rise in 2010.
According to the latest Christie & Co Business Outlook, the growth of 2010 was an anomaly and “property prices have now retreated to former levels in the face of continuing economic uncertainty”.
Christie & Co director of retail Steve Rodell said the fall provided an opportunity for acquisition within the convenience sector. “While market conditions and lack of debt finance continued to suppress transactional volumes in 2011 - and what we did see was, by and large, either estate churn by corporates or distress sales - the sector looks sure to benefit from corporate demand for going concern opportunities and new sites in 2012,” he said.
Convenience retailers would remain under pressure from supermarket expansion and reduced customer spending over the next 12 months, he added.
He warned that although stores may command strong prices on a short-term basis due to a lack of supply, as more supermarkets enter the sector this would be threatened.
The challenges were forcing a growing number of independent retailers to migrate into symbol groups, he said. “Symbol branding in convenience stores is rapidly expanding, as from the customer’s perspective there appears to be more comfort in walking into a branded format such as Spar, Nisa, Costcutter, Budgens or Londis stores rather than an unbranded independent.
“However, independents are increasingly using the new brand strength to introduce value ranges, additional product lines and competitive promotions to offset the inroads being made into their markets by the small format supermarkets such as Tesco Express.”
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