One of the best-known investors in industrial property has built up a significant portfolio of UK retail parks, betting that they will be where online and physical retail coexist.

M7 last week completed two UK retail park acquisitions totalling seven assets and £202M. That takes its outlay to £350M since it started investing in the sector in 2018 and brings its portfolio to more than 30 retail warehouse schemes across the UK.

M7 founder Richard Croft said the strategy is based around the increase in yields for retail warehouses to above those of last-mile logistics properties and that retail parks have many of the same features of good last-mile logistics, like easy vehicle access and edge-of-town locations. In future, these parks could serve as both retail and distribution properties.

“I think a lot of people have got retail wrong. I don’t think retail is dying. Retail is changing,” he told The Times. “You still need somewhere to click and collect. In London and the southeast, retail warehousing is valued at less per square foot than if it had industrial consent.”

Prime yields for last-mile logistics in London and its surroundings have fallen as low as 4.25% in some instances, compared to 6.75% for retail parks. The parks M7 has been buying are typically well let with leases of more than five years and operators that are trading well. But retail parks have to some degree been lumped in with the wider travails of the sector.

Rents in the sector are dropping, according to CBRE, but not as fast as in the shopping centre sector.

M7 paid RDI £156M for a portfolio of six retail warehouse schemes spread across the country with a yield of 7.5%, a 3% discount to their previous valuation. RDI will use the proceeds to pay back debt.

It also paid UK Commercial Property REIT £46M for the Great Lodge Retail Park in Tunbridge Wells, Kent.

M7 has assets under management of €9B (£8.3B) across Europe. It made its name in the light industrial sector, which made it one of the early players in last-mile logistics. It helped Blackstone set up Mileway, the U.S. giant’s European light-industrial platform, which in the space of three years has grown to €11B of assets.