by Joe Hoppe
British Land has recently upgraded its estimated rental value growth for its retail parks, attributing the increase to strong demand and limited supply, which provides the company with strong pricing power.
Enhanced Rental Value Growth Guidance
On Tuesday, British Land revised its estimated rental value growth for its retail parks from 2%-4% to 3%-5% for the year ending March 31. This upgrade is a result of various factors that contribute to the company’s advantageous position.
Favorable Market Conditions
British Land, which currently holds 8% of the retail park market, attributes its positive outlook to several market conditions. Firstly, limited new supply due to planning constraints, small low sizes, and market values below replacement costs, have all contributed to maintaining a high occupancy rate of 99%. Additionally, the retail parks format remains popular among customers, further bolstering the company’s pricing power.
Furthermore, British Land continues to experience significant leasing momentum across its parks. In the past five months up until August, the company has successfully leased 511,000 square feet at 15% above estimated rental values. Additionally, they have further 677,000 square feet under offer at 19% above estimate rental values.
Retail & London Urban Logistics
The Retail & London Urban Logistics sector accounts for 37% of British Land’s portfolio, highlighting the company’s strategic focus on these areas.
In conclusion, British Land’s upgraded rental value growth for its retail parks reflects a positive market outlook and highlights the company’s ability to effectively navigate market conditions and capitalize on leasing opportunities.