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LONDON-Declining retailer confidence has hit demand for out-of-town retail space, according to the latest quarterly bulletin from FPD Savills. Accordingly the rate of rental growth has slowed from 5% per annum at the beginning of the year to 2.3% at the end of September 2001. And investors have reacted to this poorer performance by pushing out yields over the last quarter to 7.7% on solus units, and 6.8% on retail parks,

But the agent said there are some marked regional variations in performance. For example, the Midlands, where there is a higher proportion of parks with unrestricted planning consents allowing all classes of retailers to trade, rental growth has been stronger.

Simon Hope, head of investment at FPDSavills, said the recent yield shift marked a buying opportunity. ‘Consumer sentiment has remained remarkably positive despite the underlying threat of a global recession and the events of 11 September,’ he said. ‘Prospects for household spending growth remain good and there is evidence that tenant demand for retail warehouse space is increasing. This relatively benign demand outlook combines with a restricted supply pipeline and should ensure future upward rental growth.’

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