Sunderland has witnessed a resurgence of investment activity with institutional investors showing keen interest in the city’s retail and leisure sectors.
Property adviser, DTZ’s sale of the Wilkinson’s department store on Fawcett Street in Sunderland for £7.5m reflecting a net initial yield of 7.1%, typifies this confidence in the city. The property is a 108,000 sq ft former House of Fraser department store let for a further 11 years. The purchaser, AUB CPIF trust was represented by Knight Frank.
Richard Turner, Senior Investment Director at DTZ’s Newcastle office commented: “There was strong interest in this asset from a wide range of investors, attracted by the security of income and prime city centre location, together with a very well trading store. The forthcoming refurbishment of the main railway and Metro station directly opposite was also well received by investors.”
The Sunniside leisure complex anchored by Empire Cinemas has also been acquired by Lumina RE Capital for £13m reflecting a 7.2% initial yield. This price is some £3.7m more than it transacted for in December 2010, demonstrating the strength of the recovery in the investment market and the improved investor sentiment for Sunderland.
Most notably the sale of The Bridges Shopping Centre to AEW for £152m, a 6.9% net initial yield, represents a major milestone for the city. The Bridges totals 550,000 sq ft and is anchored by Primark and Debenhams with a further 100 shops and forms the vast majority of the prime retail offer in the city centre.
According to Richard Turner there is still a substantial weight of capital seeking exposure to the sector and the city: “Classically retail is the first property sector out of a recession however we have seen this turned on its head over the last couple of years, with the resurgence in manufacturing which has meant the industrial sector has lead the recovery. By contrast the retail sector has been badly affected by a mix of over renting, weak tenant demand and over supply, especially of secondary units, but investors and retailers are now seeing the end of the tunnel and pricing for retail and leisure assets has sharpened measurably over the course of the past 12 months.”
He added: “We expect to see further strong interest from many investors over the remainder of the year with the weight of frustrated capital meaning further increases in pricing are likely.”