The tail end of 2025 finally saw a spate of completed and prospective deals as the market heated up. But it is a blink-and-you-miss-it opportunity to snap up malls and high street real estate while the price is still right.\u00a0<\/p>\n
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\n Silverburn shopping centre\n <\/p>\n
\u201cRetail occupier markets are arguably in their best state for over a decade,\u201d Knight Frank Head of Research Stephen Springham said. \u201cBut this fundamental strength has yet to filter fully through to investment markets, which remain more susceptible to macroeconomic and geopolitical setbacks, shockwaves and shenanigans.\u201d<\/p>\n
Total retail investment volumes were underwhelming in 2025, totalling \u00a35.83B, down 17% on 2024 and 8% below the 10-year average, according to Knight Frank<\/a>.<\/p>\n But that won’t last long\u00a0\u2014 it said that this underperformance was primarily supply-driven, caused in particular by a shortage of large-scale shopping centres up for sale.<\/p>\n A\u00a0growing belief among investors that retail has turned a corner only started to be\u00a0apparent in the fourth quarter, when a handful of high-profile deals finally kick-started the market.<\/p>\n U.S.-based\u00a0REIT Realty Income acquired The Lexicon shopping centre in Bracknell for around \u00a3150M in November in a transaction that marked its first major entry into the UK shopping centre sector, having previously focused largely on retail parks and supermarkets. It acquired the 1M SF centre from a joint venture between Schroder Capital UK Real Estate Fund and Legal & General Capital.\u00a0<\/p>\n Another significant deal was completed by Frasers Group<\/a> in December when the acquisitive retail group continued its shopping spree by purchasing the 250K SF Swindon Designer Outlet for\u00a0around \u00a3144.5M from LaSalle Investment Management<\/a>. It\u00a0has appointed Savills<\/a> as leasing agent.\u00a0<\/p>\n And in November,\u00a0M7<\/a> sold a collection of retail parks for around \u00a3100M to a consortium led by Ginkgo Tree and other institutional investors.\u00a0<\/p>\n Springham highlighted retail as the best-performing property asset class in 2025, with all retail achieving a total return of 9.6%, versus 6.6% for all property, with shopping centres and food stores achieving 10.2%.<\/p>\n That outperformance was underpinned by capital growth up 3.3%, income returns up 5.8% and rental growth of 3.5%, its highest level since 2006. Knight Frank predicted national vacancy rates will return to pre-pandemic levels of 12.4% in 2026.<\/p>\n A key difference to last year is\u00a0the emergence of\u00a0big-ticket shopping centre transactions, not least REIT Landsec<\/a>\u00a0\u2014 already highly active in the market over recent years \u2014 which is under offer to acquire the 1M SF Silverburn shopping centre in Glasgow from Henderson Park<\/a> and Eurofund Group<\/a> for\u00a0more than \u00a3200M.<\/p>\n Hammerson<\/a> also bid on that scheme after an extended period divesting retail assets and has also paid the Abu Dhabi Investment Authority<\/a> \u00a3150M for the 50% of the Oracle shopping centre in Reading, Berkshire, that it did not already own. It has undertaken similar deals to buy out JV partners at the Bullring in Birmingham and Brent Cross<\/a> in north London.<\/p>\n \u201cIf we focus on fundamentals, the higher e-commerce penetration in the UK is well ahead of Europe. That’s sort of good news, bad news,\u201d AEW\u00a0Head of Research and Strategy Hans Vrensen said.<\/p>\n \u201cThe good news is, there’s less to come, but as a result, the bad news is that vacancy rates in the UK are higher than in most other European countries.\u201d\u00a0<\/p>\n And while transaction volumes may not have been spectacular last year, he\u00a0said they have recovered better relative to Europe, returning to above 50% of the record year of 2014. Meanwhile, for European markets as a whole, they are at \u20ac32B for 2025, less than half the peak in 2015 of \u20ac77B.\u00a0<\/p>\n \u201cObviously, there are national differences, but if you look at the rest of Europe as a whole, it has recovered a lot less in terms of transaction volumes,\u201d Vrensen said. \u201cAt the same time, the rental growth for the UK is in line with European averages, except for retail parks, which we see coming out as quite a strong sector for the UK.\u201d<\/p>\n Alongside\u00a0a report titled \u201cEuropean Retail Parks & Shopping Centres are Back,\u201d AEW has an investor sentiment index\u00a0that shows the UK, which\u00a0had fallen below many other European countries and for a lot longer,\u00a0has now moved ahead in positivity.<\/p>\n \u201cBecause e-commerce was a bigger, earlier trend in the UK, plus oversupply in some segments, vacancy rates went up quite a lot, and that has been impacting on sentiment,\u201d Vrensen said. \u201cBut the centres still open now have survived the onslaught of the last cycle. Some might have to be converted to more mixed-use or maybe change the mix of retail or leisure tenants, but the yields are attractive.\u201d<\/p>\n AEW\u00a0puts UK yields for shopping centres and high street retail significantly above other European markets, sitting at about 8% for prime shopping centres.<\/p>\n That means that for secondary and tertiary shopping centres, yields that are in the double digits are still available. In continental Europe, shopping centre yields are more like 6.15%, so the UK stands out, Vrensen said,\u00a0adding that refinancing challenges still exist but again have been less prominent than in Europe.<\/p>\n The recovery is also apparent in central London, where \u00a3350M transacted over the second half of 2025, up 45% compared with the same period in 2024, taking full-year volumes to \u00a31.27B across 22 deals, a 43% increase year-on-year, according to the latest update from CBRE<\/a>. It believes investor confidence has returned, underpinned by strong occupational demand, which has fuelled rental growth.<\/p>\n<\/p>\n