UK Retail Investment Sees Resilience Amid Evolving Shopping Trends
Retail asset returns remain robust, with shopping centres and food stores each achieving 10.2% returns in the year to September, outpacing overall retail returns of 9.2%, which also lead industrial returns of 9.1% and office returns of 3.2%.
Despite growth in online shopping earlier in the decade, online penetration has stabilized at 26–28% of retail sales since the mid-2020 peak of 35%.
Investment forecast for 2026 anticipates returns around 9.5%, underpinned by demand for retail assets exceeding supply, which is expected to support increased investment volumes.
Knight Frank is currently handling the sale of Merry Hill near Dudley for approximately £300 million, attracting interest from 10 investors.
Landsec is focusing on retail assets over the next 12 to 18 months; the company owns prominent centres such as Bluewater and Trinity Leeds, has sold £295 million worth of office properties, and is in negotiations to purchase Silverburn near Glasgow for £250 million.
Shopping centres are enhancing footfall by incorporating experiential features like zip wires and darts, although smaller and older malls are under pressure due to retailers' preference for larger formats.
In 2025, retail investment totaled around £5.8 billion, marking a 17% decrease year-on-year, but transaction activity increased in the second half as pricing strengthened.
The national vacancy rate for shops stands at 13.5%, the lowest since 2020. High-street trades in the second half of 2025 reached £420 million, a 150% rise from the first half.
Rental growth is expected to be approximately 6.9% for prime centres and regional cities, reflecting positive trends in physical retail spaces.
