Land Securities is investing heavily in prime shopping centres despite a sector trend to avoid such purchases.
- The company has allocated nearly £600 million to acquire top-tier retail properties.
- CEO Mark Allan emphasised confidence in strategic spending within the next six months.
- Prime retail locations have seen a drop in rents since 2016, though recent trends show a rebound.
- Landsec, alongside Frasers Group, is expanding its shopping centre portfolio in the UK.
Land Securities, a prominent property developer, is defying current market trends by setting aside substantial funds to acquire shopping centres. While many landlords have been hesitant to invest in large malls, Landsec remains optimistic about the future of top-tier ‘destination’ malls, believing they will continue to hold significance. The developer has earmarked close to £600 million for these investments, illustrating its confidence in the sector’s potential.
During a recent statement, Landsec CEO Mark Allan articulated his confidence in utilising the reserved funds over the next half year. Allan clarified that the firm’s strategy is not to indiscriminately acquire shopping centres, but rather to focus on those within the upper echelon of the market. He noted that such high-calibre malls are now irreplaceable, with construction costs far exceeding current market values. According to Allan, consumers and retailers will continue to converge in these dominant retail spaces.
Allan indicated that Landsec is eyeing several promising deals where capital deployment is anticipated in the latter half of the financial year. He pointed out that while rents for prime shopping centres saw a significant decline—by approximately one-third since their peak in 2016—they are now on an upward trajectory. Allan stated, ‘Whether it is brilliantly located central London offices with great sustainability credentials or catchment-dominant major retail destinations, the theme is the same: best-in-class assets are materially outperforming.’
Landsec’s strategic move is in line with actions taken by the Frasers Group, which has recently expanded its own shopping centre holdings. The group acquired multiple malls across the UK in a bid to broaden its property portfolio, including locations such as Princesshay Shopping Centre in Exeter, Fremlin Walk Shopping Centre in Kent, and Olympus Centre retail park in Gloucester.
Landsec’s targeted investment strategy underscores its belief in the enduring value of prime retail destinations.
