Landsec is making a bold move by setting aside significant funds to expand its portfolio of top-tier shopping centers.
- The company is earmarking nearly £600 million to invest strategically in ‘destination’ malls, aligning with their long-term vision.
- Despite a general market reluctance, Landsec believes these prime retail spaces will continue to thrive.
- CEO Mark Allan emphasizes a focused investment approach, targeting only the top 1% of retail properties.
- With rental rates starting to climb again, Landsec is positioning itself to capitalize on this emerging trend.
Investment firm Landsec is strategically positioning itself to acquire top-tier shopping centers, setting aside a substantial budget of almost £600 million. This move highlights their commitment to securing long-term assets in prime retail locations, which are expected to remain relevant even as the retail landscape evolves.
The decision comes as most industry players have shied away from large-scale acquisitions of malls, yet Landsec’s leadership is confident in the enduring appeal of these ‘destination’ centers. As articulated by CEO Mark Allan, the firm is not interested in amassing a broad array of shopping centers, but is instead focused on acquiring only those in the top 1% of quality and location.
Allan’s strategic foresight is backed by the observation that no new top-tier malls are being constructed, as the cost to build them now far exceeds their current market value. This scarcity of new developments enhances the appeal and potential profitability of existing prime locations. In his words, ‘If you own really good, catchment-dominant retail, retailers and shoppers will concentrate in that space.’
The firm is optimistic about deploying their capital strategically over the next six months, eyeing various deals that align with their vision of owning best-in-class assets. Notably, rental prices for these premium shopping centers have dropped by about a third from their peak in 2016 but are beginning to rise again, signaling a recovery in market conditions.
Landsec’s expansion plans echo the recent actions of the Frasers Group, which acquired several major shopping centers across the UK, reinforcing a trend among industry leaders to strengthen their retail property portfolios amid changing market dynamics.
Landsec is positioning itself for long-term success by selectively acquiring top-performing shopping centers in a recovering market.
