Supermarkets will lead investment in retail in 2022

Supermarkets will lead investment in retail in 2022

Supermarkets are the 'kings of retail'. After two years leading investment in the sector, with 1,127 million, they will once again attract the interest of funds and family offices in 2022.

The great resistance of the food sector during the pandemic, demonstrated by the robustness of income and the signing of increasingly long-term contracts, has made this type of asset a safe value for private funds and institutional. So much so that in recent years they have accounted for almost half of the total volume of investment in the retail segment. And, looking ahead to this year, "the ambitious expansion plans, both of the national and regional food operators that are making the leap to the national level, keep this market alive and with interesting opportunities for investors", they point out from Savills Aguirre Newman.

According to a study by the consultancy firm, in 2021 alone, food surfaces accounted for 46% of investment in retail, being, therefore, the main engine of activity.

In 2020, 675 million euros were signed, a record figure for the sector, while this upward trend continued throughout 2021, marking the second highest figure in the historical series, with just over 452 million euros of investment .

However, during the last two years two factors have appeared that are affecting the evolution of rents, reducing the bargaining power of the owners. On the one hand, food operators are already aware of their growing role and are more rigid in negotiations, and on the other hand, the saturation of the market makes it more necessary to be more selective in the choice of locations.

Rents above 10 euros/sqm/month

The consultancy emphasizes that the best positioned supermarkets in terms of location can reach an income of more than ten euros per square meter per month, while the national average is nine euros per square meter per month. In markets with greater purchasing power, such as Madrid or the Basque Country, or with fewer possibilities for expansion, such as the Canary Islands, they could reach rents close to ten euros per square meter per month. Others, such as Catalonia (8.6 euros/sqm/month) or the Valencian Community (8.1 euros/sqm/month), have lower rents due to the lower weight of prime locations over the total stock.

The formula that has led most of the operations has been the sale & leaseback, which allows the seller to release and capitalize the value of real estate assets with long-term lease contracts, to invest in expansion plans, while the buyer provides high levels of profitability.

According to Savills, the profile of the buyer in supermarkets is very varied: from institutional investors, who focus mainly on portfolios or independent supermarkets, to private investors with less financial lung, who buy individual assets at a higher repercussion value. Thus, in 2021, 98% of the total investment in supermarkets was made by funds, of which 57% had American origin. On the other hand, 44% of the sellers have been food operators, while 35% have been Socimis. The Spanish have sold 59% of the volume, while the French have sold 21%.

The two most important operations of 2021 have been the acquisition of the package of 27 Mercadona stores acquired by the Israeli fund MDSR for 103 million euros, and the 27 Caprabo supermarkets that Realty Income Corporation acquired for 100 million euros. This last company also took over two packages of Carrefour stores.

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