Landsec is actively investing in prime shopping centres, setting aside significant capital for acquisitions.

• The firm aims to acquire top 1% ‘destination’ malls, believing their relevance will persist.
• CEO Mark Allan expresses confidence in utilising the allocated funds within six months.
• Landsec’s strategy follows a market trend of declining rents for prime centres, now beginning to recover.
• Joining this expansion, Frasers Group recently acquired several UK shopping centres.

Landsec, a property developer, has earmarked hundreds of millions for the acquisition of prime shopping centres over the coming months. While many landlords have been hesitant to invest in major malls recently, Landsec is optimistic about the continued appeal of the top-tier ‘destination’ malls. The firm has allocated nearly £600 million for this purpose, including expanding its share in Bluewater shopping centre this year.

CEO Mark Allan has articulated a clear strategy, stating, ‘What we’re not trying to do is buy up various shopping centres that aren’t in that top 1%.’ He highlighted the value of owning ‘catchment-dominant retail’ as no new large malls are being constructed due to high costs compared to their current value. Allan is confident about deploying more capital over the next six months in these select assets.

There is a notable trend where rents for prime shopping centres have decreased by one-third from their peak in 2016 but are now seeing a gradual increase. This shift in the rental landscape drives Landsec’s strategic focus on acquiring premium locations, ensuring they remain ahead in the competitive market. Allan noted, ‘Whether it’s 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.’

The strategy aligns with a broader market movement, as evidenced by the actions of Frasers Group, which recently expanded its property portfolio. In October, Frasers acquired three UK malls, further emphasising an industry-wide confidence in the future of prime shopping destinations.

Landsec’s strategic financial commitment underscores its confidence in the enduring value of top-tier retail properties.