Despite facing several challenges in 2023, many stores maintained good profitability, which fuelled buyers’ appetite, according to specialist business property adviser Christie & Co.
Its Business Outlook 2024 report reflected on key market activity, trends and challenges of 2023 and forecasts what 2024 might bring across the industries in which Christie & Co operates, including the convenience retail sector.
It found that retailers came under pressure in 2023 from supply chain inflation, price-sensitive customers and rising store theft, all amid the cost-of-living crisis.
Despite this, the report revealed that many stores sustained impressive levels of profitability resulting in buyer appetite among existing retailers, investors and a growing number of small multiple independents seeking expansion.
The report predicted that in 2024, demand for convenience retail assets will continue to exceed supply as buyers are attracted to their strong, need-driven trading fundamentals and that many first-time buyers are still looking to enter the sector.
According to Christie & Co., the average offers for convenience stores have started to balance out against the peaks seen in 2021-2022. However, the team still receives multiple offers per instruction and the long-term trend remains on an upward trajectory.
In addition, the aggregate value of offers was 31% higher and instruction viewings increased by 17% compared to 2022.
It also found that the demand is strongest for mid- to high-turnover stores (sales of £25,000 per week or higher) and buyers are willing to pay premiums for high-performing sites.
Other results said that many first-time buyers are still looking to enter the sector and that multi-site operators will remain acquisitive and are looking to expand existing portfolios.
Steve Rodell managing director of retail at Christie & Co said: “Whilst it is clear to all that the economy faced a variety of challenges in 2023, the convenience sector was one to ‘weather the storm’. It remains a solid sector in which to invest, even though it faced increasing competition from major corporate entities. Buyers new to the industry need to take good advice on location and store format before jumping in, but when they get it right, the return on investment can be attractive.”
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