Retail introduction
“We aim to be the partner of choice for retailers, understanding and anticipating their needs and helping them to achieve their objectives by providing modern accommodation in prime locations, adaptable to changing formats.
As one of the largest owners of retail property space in the UK, we have the scale and expertise to deliver what retailers want, and to anticipate their future needs in a dynamic marketplace. Over the last 12 months, we have agreed 600 leasing transactions with retailers in a testing occupational market and maintained a 99% occupancy rate, reflecting the quality of our portfolio and our significant asset management skills.
We recognise that, for retailers who are seeking expansion space, there is a relatively limited supply in the marketplace of modern flexible accommodation in prime locations. We are adding to our existing portfolio, both by acquiring or creating prime assets with growth potential and by remodelling and extending our existing assets. Our recent purchase of a 50% interest in Surrey Quays Shopping Centre is a good example of this strategy, as we plan to improve and expand this prime asset over the short- and medium-term. Across our existing portfolio, we also have 750,000 sq ft of retail planning consent available to implement.
Our retail portfolio is focused on prime out-of-town locations where accommodation can be adapted to suit a wide range of trading formats. We correctly anticipated retailer demand for this type of space, which offers cost efficiencies and flexibility of format, whilst being easily accessible to shoppers. We believe retailer demand will continue to polarise towards in-town or out-of-town real estate that can satisfy these basic criteria. Going forward, we are well positioned to deliver the next generation of retail space, both in-town and out-of-town, leveraging our real estate capabilities, our retailer relationships and our ability to generate opportunities through third-party partnerships.
In Continental Europe, we own and manage 12 retail properties, either through the property fund PREF or through direct investment. We continue to monitor real estate trends, similar to those experienced in the UK over the past 20 years. However, there are significant differences between the EU and UK retail offer, so our new initiatives are likely to be focused on out-of-town and big box retail investment in markets where we have locally based expertise.
We understand our retail occupiers' focus on protecting and growing profit and so continue to work in partnership with our retail occupiers and managing agents to identify opportunities to reduce total occupancy costs, at the same time facilitating the right environment to encourage higher sales volumes. I am pleased that this year, in the UK, we saved retailers £2.9 million by cutting service charge costs by 10% per m² on average, whilst maintaining high levels of service and, in many instances, actually improving trends in footfall. We also used the scale of our portfolio to negotiate 5% lower insurance premiums per m² on average.
I am proud of the strength and depth of the relationships that our asset managers have built with our retail occupiers, which contributed to retailers voting us Landlord of the Year 2009 and Best Service Charge Provider, making us the first landlord to win both awards in the same year. As well as offering the best quality retail space, we aim to be easy to do business with, responding promptly to requests and being proactive in our efforts to meet retailers’ needs. Our ability to build strong relationships is reflected in our successful joint ventures with superstores such as Tesco and Sainsbury’s. These make us the largest investment holder of supermarkets in the UK, outside of the supermarkets themselves.
Next year, we will carry out our fourth independent survey, as part of our effort to further improve customer service and satisfaction, understanding and anticipation of retail trends. We welcome feedback and invite retailers to get in touch with us where we can be of help.”