Retail

2024 retail deal activity continued in the same vein as H2 2023. Despite operational challenges from rising crime and state intervention on unhealthy products, convenience trading remains a robust sector driven by need. 

However, the ever-increasing operator cost base is causing the multiples to increase the turnover threshold for profitable stores, inevitably presenting opportunities for independent buyers. Over the last five years, our market-leading service in the corporate space has seen Christie & Co feeding the growth of several multiple independent retailers (‘Miniples’) who remain acquisitive.  

Demand for petrol filling stations (PFS) remained strong with buyers continually outnumbering sellers, and by Q3 2024 we sold more sites than in all of 2023. Many operators have made significant investments in their real estate to attract customers to the forecourt. Significant market changes included MFG's acquisition of 337 Morrisons forecourts for £2.5 billion and EG on the Move's purchase of 34 ASDA sites for £228 million.

The take up of Battery Electric Vehicles (BEV) has faltered and the consumer appears to prefer hybrid vehicles for now. The top operators have become more selective and will only pay top prices for large sites that can be developed in various directions in the future.  

Valuation of petrol stations is a highly specialist area and required our market knowledge to identify buyer profiles and pricing methodologies for lenders and stakeholders across the UK.

Our Garden Centre team cemented their position as market leaders in the sector as evidenced by the string of deals announced in trade press. This underpinned the solid valuations we delivered to financial institutions and stakeholders in that sector. We are proud to have become the ‘go to’ advisor across all these areas and look forward to building new relationships as investors are attracted to this area of our expertise. 

The retail investment market remained subdued during 2024, characterised by a lack of stock. Despite consumer caution, investor sentiment improved slightly with the Bank of England Base Rate reduction to 4.75%. If inflation remains low, further base rate reductions in 2025 should have a positive impact on the cost of borrowing and improve investor appetite for good quality retail investments.  

Relatively long leases and stable rental income from convenience store investments continue to attract private investors and family offices. The strongest demand is for modern stand-alone freehold stores, with on-site parking and strong residential catchments. However, investors are also focused on the income security provided by national retailer covenants, particularly Tesco and Sainsbury’s.

Investment activity in the garden centre sector also focused on the largest national operators. While Dobbies Garden Centres plans a financial restructuring, investor interest has turned to the stronger financial covenant of Blue Diamond Garden Centres. Specialist real estate funds remain interested in larger destination garden centre assets, with broad retail and leisure offerings, continuing into 2025.

Notable garden centre investment transactions in 2024 include the sale of Bridgemere Garden Centre in Cheshire for £16.5 million and the sale of Cadbury Garden Centre in Somerset for £24.1m, both let to Blue Diamond UK Ltd. Christie & Co provided acquisition advice to a UK pension fund as part of the bidding process for the Cadbury Garden Centre.

Occupational demand for petrol filling stations in high-traffic locations remained robust during 2024 with several ‘new to industry’ sites being developed. However, investment demand is subdued, with fewer transactions. Nevertheless, smaller forecourt investments with long unexpired lease terms are still popular with private investors and we expect that 2025 will provide larger investors with the opportunity to acquire long-term strategic ‘EV ready’ assets backed by strong national operator covenants.