First Quench closures reveal reasons for property optimism

For owners of independent local shops and operators of regional groups, the property benchmark provided by Christie + Co, the business agents, is a good barometer of their asset values, which are now some 16 per cent below the peak achieved in the last quarter of 2007.

In presenting the figure, Chris Day, the company’s managing director, suggested that the low point had now been reached. Demand for good retail sites remains strong, as is shown by the company’s handling of the administration of First Quench, who owned Threshers and Wine Rack. Christie + Co was retained to market 1,200 sites before Christmas and asked for best and final offers, of which it received more than 3,000.

Head of retail Tony Evans reported last week that more than 650 sales had been agreed, mostly to independent operators. “The interest from the independent sector has been fantastic,” Mr Evans said. The better sites attracted lots of offers, the best receiving more than 30.

Looking into 2010, Mr Evans is optimistic about prospects for independent stores. This is based partly on industry consensus but also on his knowledge of how well the top local store operators are doing.

One of the striking things in 2009, in contrast to 2008, was the low level of first-time buyers for retail properties. This is mainly due to the problems they would face in getting bank finance, a trend that may continue into the future.

The good news about the FQ sales is that there is still money chasing good sites in the local shop market. The buyers are either local operators with cash resources or those with a good track record and the backing of their bank.

Another factor that may help prices is the positive sentiment about property investment, which together with rising prices may see banks put on the market distressed assets that they hold. The main reason these have not been offered for sale is that the banks are waiting for values to improve.