Schroders Capital UK Real Estate Fund (SCREF) has announced that it has completed 121,000 sq ft of new lettings across its portfolio of retail warehousing assets in the East of England – with deals signed in Essex, Kent, East London, and Norfolk.
The lettings, which take SCREF’s total retail warehouse and leisure portfolio to 93% let by ERV, were agreed at the fund’s retail parks in Chatham, Norwich, Colchester, Chelmsford, and Romford. With all of the deals being committed on 10- or 15-year terms, the news highlights the expertise of Schroders Capital team in this area to continue to cater to the demand for retail warehousing units from convenience and leisure-led occupiers.
At the popular Chatham Waterside in Kent, SCREF has signed fast growing dessert chain Kaspas and global coffee shop operator Costa on 10-year leases. Kaspas will occupy a 1,650 sq ft unit, while Costa will move into a 1,450 sq ft unit with both set to open in the next month.
The arrival of Kaspas and Costa follows the recent openings of KFC, Gymfinity Kids and Ninja Warrior UK at Chatham Waterside. The leisure scheme also includes Odeon Cinema and Pure Gym, as well as well-known restaurant operators such as Nandos, Subway and Pizza Hut. This recent run of new lettings means that only one unit remains available at the 123,000 sq ft site.
Alongside the lettings at Chatham, SCREF also announced a series of deals at its retail parks in Norwich and Colchester. At Hall Road Retail Park in Norwich, Pump Gyms has joined the line-up, committing to a 16,500 sq ft letting on a 25-year lease, whilst electricals brand Hughes has extended its lease on its 21,500 sq ft store to 10 years term certain. Meanwhile at Turner Rise Retail Park in Colchester, a 10-year lease has been secured with B&M on a 32,500 sq ft unit, Bensons for Beds has committed to a 10,000 sq ft unit on a new 10-year lease and a third major national chain is currently finalising a five-year extension to an existing lease on 30,000 sq ft.
Schroders Capital has transformed both assets in recent years, with Homebase at Hall Road being downsized and the 80,000 sq ft unit being reconfigured into four separate units which have been let to Homebase, Iceland, Home Bargains and now Pump Gyms on long-term leases. The transformation of Hall Road has showcased the team’s proactive approach to asset management to ensure the space provided the accommodation that modern tenants need, keeping ahead of the curve to maintain and increase the fund’s rental income.
Earlier this year, SCREF also acquired The Brewery in Romford, a 21-acre retail and leisure space anchored by national operators including a Sainsbury’s superstore, Nuffield Health, The Range, Boots, Pure Gym, a 16-screen Vue Cinema and several food and beverage outlets, as the Fund looks to capitalise on the demand for retail and leisure warehousing.
Since the acquisition, SCREF is under offer on a trio of deals with new national occupiers for a collective 10,500 sq ft of space; with each of the units being committed on 15-year leases. Another 8,200 sq ft unit in Romford has been extended by existing operator Cosmo for a further seven years.
This run of activity commenced at the start of 2022, when a 15-year lease to “Fridays”, formerly TGI Fridays, was signed at The Meadows Retail Park in Chelmsford town centre. The new 8,250 sq ft flagship restaurant is due to open later this quarter.
The series of new lettings across SCREF’s retail warehouse and leisure portfolio comes as Schroders research finds that retail park rents are expected to stabilise, with customer footfall at retail parks currently 3% ahead of pre-pandemic levels. With typical rents and service charges being lower than shopping centres, Schroders expects there will be continued demand for retail park units from discount retailers, convenience-led occupiers, gyms as well as coffee and ‘grab-and-go’ food chains.
Tom Woolven, Asset Manager at Schroders Capital, said: “Our partnership approach with our tenants gives us strategic insight into how best to model and provide the physical real estate they need for optimum trading performance. This is increasingly important as the sector continues to evolve following the challenges brought about by the pandemic and online shopping.
“SCREF’s well-located portfolio of retail warehouse assets feature a diverse tenant mixwhich allows the schemes to benefit from robust footfall and result in a strong trading performance. With affordable rents, and near full occupancy, our retail warehouse assets continue to create long term sustainable income growth and strong returns for SCREF investors.”