U.K. Retail Insights: Outlets – The Hidden Gem

Outlet centres are hidden gems in the world of retail real estate. Often bundled in with shopping centres, outlets offer a distinct experience for customers and return-profile for landlords. For customers, it is the promise of big-brand discounts; for landlords it is an opportunity to partake in medium-term upside through turnover-linked rents – unlike most other retail locations.

The outlet operational model increasingly appears to be a blueprint for other retail formats, typified by highly intense asset management, the ubiquity of turnover leases, and data sharing between occupiers and landlords. Hammerson’s recent sale of its 40% stake in Value Retail shined a light onto the subsector. Even so, the outlet model is relatively underexplored by most investors.

This report provides an overview of the operational and valuation drivers of the U.K. outlet market.