After one of the biggest quarterly net asset value (NAV) rises for a property company on record, the value of British Land's office and retail portfolio increased 8.2 per cent in the period, showing the positive impact of gearing now the good times are back. Shares had already been boosted with news of a big City office letting to Macquarie, and the retail portfolio is proving particularly resilient.
Now 99 per cent let, footfall at British Land's retail parks and Meadowhall shopping centre rose 5 per cent in the three months to the end of December, outperforming the UK average of 3 per cent. Chief executive Chris Grigg says extensions totalling 750,000 sq ft are planned, and that rent-free incentives on new leases granted at Meadowhall fell in the period, thanks to strong tenant demand.
But there are chill winds blowing in the retail sector. This week's figures from the British Retail Consortium (BRC) showed UK high streets suffered their worst January for 15 years, thanks to snowed-in shoppers. And new research from the British Property Federation (BPF) shows one in five high-street shops in Kent, the Midlands and North East are standing empty.
Speaking at the BPF's launch event, Professor Barry Gilbertson of PricewaterhouseCoopers said it was "inevitable" that more retail insolvencies would follow in 2010, with Ethel Austin, Adams and Diamonds & Pearls already in administration.
Retailers are also changing their occupation strategies, according to Matthew Hopkinson, director of the Local Data Company which compiled the BPF research. He forecasts retailers will operate larger stores in fewer locations, and whilst budget brands and luxury stores are thriving, high streets will see "the death of the mid-range".
Is Mr Grigg concerned by the thought of more insolvencies? Not a jot. Boasting that his centres are where retailers and shoppers want to be, he said: "If you've got units in the right places, it's much easier to fill them."
