DTZi buys South West retail park for £42m

DTZ Investors has acquired a prime retail park in the South West for £42.5m in the latest sign of the sector’s popularity.

The Kingsditch Retail Park in Cheltenham was bought from M&G Real Estate in an off-market deal that reflected a net initial yield of 5.65%.

Tenants at the 103,675 sq ft park include Marks & Spencer, Argos, ScS, Harveys Furniture and B&M Stores, and the passing rent is £2.5m a year.

The scheme offers opportunities for asset management, and agents said several new tenants were seeking representation on the park.

“It is well suited to our strategy of buying retail in prosperous catchments, with the opportunity to further add value through active management,” said David Hyland, senior director at DTZ Investors.

Active sector

Retail warehousing has been one of the most active sectors in the retail market this year.

In the second half of the year alone, headline deals have included Surrey County Council’s acquisition of Malvern Shopping Park from Consolidated Property Group for £74m; Orchard Street’s acquisition of Altrincham Retail Park from The Crown Estate for £63m; and M&G Real Estate’s purchase of the Riverside Retail Park in Chelmsford for £53m from British Airways Pension Fund.

This activity has been spurred on by strong demand on the occupier front. According to research by Trevor Wood Associates, the average vacancy rate has fallen from a peak of 10% in mid-2013 to 5.1% in the first half of this year.

This was despite several out-of-town retailers including Brantano and 99p Stores going into administration and several others, such as B&Q and Currys/PC World, downsizing their property holdings.

HampsonWall represented DTZ Investors on the acquisition and CWM acted for M&G.

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