2015 was a strong year in the Automotive and Roadside sectors and was generally characterised by more occupiers chasing fewer opportunities and trying to compete with residential demand and values. We see the strong residential market continue to frustrate expansion plans in 2016. Our predictions are set out below.

Dealerships

  • We see further consolidation likely, albeit probably outside of the top 10-20 dealer groups.
  • Demand for sites is expected to be stronger, particularly in the south-east as dealers and manufacturers seek to improve/upgrade/relocate.
  • More manufacturers are likely to require premises to be upgraded. Jaguar Land Rover and Nissan rolled out substantial upgrade programmes in 2015 and we believe this is likely to be particularly prevalent at the prestige end of the market.
  • Capital and rental values are likely to climb, at least until interest rates start to increase, as investors chase fewer opportunities.
  • There will be more representation from dealers in major shopping centres; eg. the “pop up” shops in Westfield and The Bullring and possibly even the opening of stores on the high street.
  • Demand from investors will remain very strong for dealership property and it is possible we will see a record yield in 2016 as investors chase prestige opportunities.

Fuel

  • 2015 saw supermarkets curtailing their acquisition programmes, oil companies exiting direct retailing and the significant injection of capital into the larger independent dealer groups by private equity companies.
  • 2016 will see the dealer groups expanding further and more new to industry developments with complementary food offers. “Churn” will still occur as lower margin sites are closed and converted to other uses.
  • Yields will harden in the investment sector.
  • Specialist developers will start to build up a pipeline of schemes to satisfy an ever growing demand from existing and new entrants to the roadside market.

Roadside retail/trade counter

  • Values are likely to increase as occupiers have far fewer opportunities to pursue.
  • Further expansion is likely, for example from Topps Tiles, Vets4Pets, Formula One Autocentres and Halfords Autocentres.
  • It is also possible that stronger demand could lead to increasing confidence from developers to build speculative schemes.
  • In order to satisfy shareholder demand for further expansion, occupiers may need to be more innovative in changing their store formats such as Topps Tiles recent “Boutique” format, located in generally affluent areas, particularly inside London.

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