As 'Shockwaves And Shenanigans' Recede, Investors Move Fast To Snap Up UK Retail Bargains

Retail’s return to the top table may not yet be fully reflected in transaction volumes, but for investors waiting in the wings, the opportunity to snap up a bargain could disappear before they know.

Despite being buffeted by e-commerce, Brexit and austerity, AEW said the UK’s beleaguered shopping centres and retail parks offer some of the best value opportunities on the continent, with yields still significantly higher than those around most of Europe.

The tail end of 2025 finally saw a spate of completed and prospective deals as the market heated up. But it is a blink-and-you-miss-it opportunity to snap up malls and high street real estate while the price is still right. 

“Retail occupier markets are arguably in their best state for over a decade,” Knight Frank Head of Research Stephen Springham said. “But this fundamental strength has yet to filter fully through to investment markets, which remain more susceptible to macroeconomic and geopolitical setbacks, shockwaves and shenanigans.”

Total retail investment volumes were underwhelming in 2025, totalling £5.83B, down 17% on 2024 and 8% below the 10-year average, according to Knight Frank.

But that won't last long — it said that this underperformance was primarily supply-driven, caused in particular by a shortage of large-scale shopping centres up for sale.

A growing belief among investors that retail has turned a corner only started to be apparent in the fourth quarter, when a handful of high-profile deals finally kick-started the market.

U.S.-based REIT Realty Income acquired The Lexicon shopping centre in Bracknell for around £150M in November in a transaction that marked its first major entry into the UK shopping centre sector, having previously focused largely on retail parks and supermarkets. It acquired the 1M SF centre from a joint venture between Schroder Capital UK Real Estate Fund and Legal & General Capital. 

Another significant deal was completed by Frasers Group in December when the acquisitive retail group continued its shopping spree by purchasing the 250K SF Swindon Designer Outlet for around £144.5M from LaSalle Investment Management. It has appointed Savills as leasing agent. 

And in November, M7 sold a collection of retail parks for around £100M to a consortium led by Ginkgo Tree and other institutional investors. 

Springham highlighted retail as the best-performing property asset class in 2025, with all retail achieving a total return of 9.6%, versus 6.6% for all property, with shopping centres and food stores achieving 10.2%.

That outperformance was underpinned by capital growth up 3.3%, income returns up 5.8% and rental growth of 3.5%, its highest level since 2006. Knight Frank predicted national vacancy rates will return to pre-pandemic levels of 12.4% in 2026.

A key difference to last year is the emergence of big-ticket shopping centre transactions, not least REIT Landsec — already highly active in the market over recent years — which is under offer to acquire the 1M SF Silverburn shopping centre in Glasgow from Henderson Park and Eurofund Group for more than £200M.

Hammerson also bid on that scheme after an extended period divesting retail assets and has also paid the Abu Dhabi Investment Authority £150M for the 50% of the Oracle shopping centre in Reading, Berkshire, that it did not already own. It has undertaken similar deals to buy out JV partners at the Bullring in Birmingham and Brent Cross in north London.

“If we focus on fundamentals, the higher e-commerce penetration in the UK is well ahead of Europe. That's sort of good news, bad news,” AEW Head of Research and Strategy Hans Vrensen said.

“The good news is, there's less to come, but as a result, the bad news is that vacancy rates in the UK are higher than in most other European countries.” 

And while transaction volumes may not have been spectacular last year, he said they have recovered better relative to Europe, returning to above 50% of the record year of 2014. Meanwhile, for European markets as a whole, they are at €32B for 2025, less than half the peak in 2015 of €77B. 

“Obviously, there are national differences, but if you look at the rest of Europe as a whole, it has recovered a lot less in terms of transaction volumes,” Vrensen said. “At the same time, the rental growth for the UK is in line with European averages, except for retail parks, which we see coming out as quite a strong sector for the UK.”

Alongside a report titled “European Retail Parks & Shopping Centres are Back,” AEW has an investor sentiment index that shows the UK, which had fallen below many other European countries and for a lot longer, has now moved ahead in positivity.

“Because e-commerce was a bigger, earlier trend in the UK, plus oversupply in some segments, vacancy rates went up quite a lot, and that has been impacting on sentiment,” Vrensen said. “But the centres still open now have survived the onslaught of the last cycle. Some might have to be converted to more mixed-use or maybe change the mix of retail or leisure tenants, but the yields are attractive.”

AEW puts UK yields for shopping centres and high street retail significantly above other European markets, sitting at about 8% for prime shopping centres.

That means that for secondary and tertiary shopping centres, yields that are in the double digits are still available. In continental Europe, shopping centre yields are more like 6.15%, so the UK stands out, Vrensen said, adding that refinancing challenges still exist but again have been less prominent than in Europe.

The recovery is also apparent in central London, where £350M transacted over the second half of 2025, up 45% compared with the same period in 2024, taking full-year volumes to £1.27B across 22 deals, a 43% increase year-on-year, according to the latest update from CBRE. It believes investor confidence has returned, underpinned by strong occupational demand, which has fuelled rental growth.

On Oxford Street — where the London mayor has just given the green light for partial pedestrianisation — prime Zone A rents increased by 19% over 2025, and yields compressed by 25 basis points to 4.25%, now in line with Regent Street for the first time in six years, CBRE said. 

Institutional investors have also returned, including Aberdeen Investments’ acquisition of Standbrook House on Old Bond Street for just under £120M, the largest transaction in H2, let to luxury retailers Richard Mille and Tod’s on the ground floor and sold by Hong Kong property investor Lai Wing. 

CBRE also pointed to the potential sale of St Christopher’s Place, while owner-occupier Pop Mart acquired 149-151 Oxford Street for £63M and Graff purchased 43 Conduit Street for £11.25M, with the sale of Herno at 31 Old Bond Street for £36.3M. 

“If the risks have been mostly absorbed, perhaps now would be a good time to go into retail, especially while there are not a lot of other active investors focusing on the sector,” Vrensen said. “As soon as everybody is interested, guess what: Prices will go up.”