"I'm hugely optimistic," says Cushman & Wakefield's head of UK retail and leisure, Dom Bouvet, as he discusses the sentiment around prime shopping centres and retail parks, with many showing low void rates and, in some cases, rental growth.

It's a far cry from recent years, when the COVID-19 pandemic pushed consumers further towards online shopping, which made up north of 50% of all retail sales at the height of the global health crisis.

But times are changing. Consumers are voting with their feet and returning to bricks-and-mortar shops for the experience of rifling through clothes hangers or making use of nearby leisure experiences.

CoStar News speaks to Bouvet about the effect of consumers' return to in-person shopping and how it's influencing retail and leisure occupiers. He also discusses the increasing appeal of UK retail properties to investors and explains how the agency is recruiting to strengthen its services.

At the end of last year, Zara opened its largest store in Scotland at British Land's Glasgow Fort retail park, expanding into 37,000 square feet at the former Debenhams unit.

The move, which doubled its footprint at the scheme, reflected the brand's "incredibly popular" existing store, according to Phil Goodman, the centre director, as well as the increased use of retail parks by consumers during and after the pandemic.

Bouvet, at Cushman & Wakefield since 2018, says Zara's expansion in Glasgow is typical of a host of major brands responding to stalling online retail sales, which now stand at around 26%, and the return of shoppers back to stores.

"Retailers are expanding, both their portfolios, but also upsizing stores", he says. "We are seeing a huge amount of upsizing of major stores across the major shopping centres, from all the big brands; Primark, JD, Boots and TX Maxx.

"They believe in it, and that's because of the consumer – that's what it all comes down to at the end of the day, the consumer wants to go out and shop. People will always do online shopping; we are not saying it is going anywhere, but what has happened is that, rather than it increasing over time, it has been plateauing.

"That's what we have seen for the last two and a half years and retailers are taking stock of that. Retailers are expanding their physical portfolio because customers are heading into shops and online sales have plateaued."

Firms expanding their stores or taking new space at prime shopping centres and retail parks means many are registering low void rates, according to Bouvet, particularly the top 20 to 30 shopping centres in the UK.

He uses Westfield Stratford as an example of a scheme letting up well, with circa just 2% vacancy. Regional schemes, such as SouthGate Bath, are also filling up, leading to competition for space and, in turn, creating rental growth.

Increased take-up and rental growth at prime shopping centres is not going unnoticed by real estate investors, who the Cushman managing partner says are opening up to retail again after a hiatus.

He uses Blackstone's activity in the London market earlier this year as a prime example, after it wrapped up a £227 million deal for 130-134 New Bond Street, an office and retail block, as revealed by CoStar News, which it will turn into a flagship store.

Last month, Royal London Asset Management Property also completed a deal for a 50% stake in centre:mk, with market sources suggesting it paid around £140 million, representing a yield of 9%. Some say the deals marked the end price discovery for prime retail assets.

Another larger asset being sold in London is Mark Capital's Borough Yards, which Cushman & Wakefield is selling on behalf of the investor, seeking offers in excess of £140 million.

Bouvet says the liquidity in the UK shopping centre market has "changed dramatically" in recent times, adding its investment market is in the "best shape since 2015" due to factors like improving footfalls, lower void rates and stabilising rents, as well as the increasing availability of debt, with the last readily available again.

"All of the pieces are aligned," he says, "you've got the occupational market being very strong, net operating income are improving as a result, and you have a situation whereby you can source debt. But you've also got a position whereby you have brands who are looking to expand.

"There is also debt that is on very attractive margins. If you look at the kind of margins we are starting to see, they are not far off where the residential and the private rental sector is – it's not quite at that level, but they have gone down from say 400 basis points to 225 basis points, and I think that is quite significant."

The property adviser is predicting that prime shopping centre yields will continue to move in again, having lowered its benchmark for the first time in a decade earlier this year, reducing yield predictions from 8% to 7.75%.

He adds: "I've been doing this for 20 years and it's exciting to see where this market was five years ago to where it is today. In terms of the next steps, we do envisage that yields will continue to come in on shopping centres in particular, we think the debt market will remain."

It's not just prime shopping centres that are doing well, Bouvet says, as he explains the purple patch being enjoyed by out-of-town retail schemes, with plenty of investors circling the subsector amid strong take-up.

British Land has been one of the most active buyers, investing more than £700 million since April, with its chief Simon Carter calling retail parks its "preferred format for retail".

The subsector's popularity was shown again this week, with Redevco completing a £518 million UK retail park portfolio acquisition from Oxford Properties. It includes 16 properties across the UK, reported here.

Bouvet says liquidity has increased around retail parks as well, labelling that investment market "incredibly hot". He adds there is a large amount of stock on the market, with yields standing at around 5% to 6%.

He says the out-of-town market will have a "fundamental role" to play in the future, helped by its ability to attract international capital. He says: "For the US money, it is very easy for them to get their head around a retail park.

"It also has low occupational costs, and you can often manage ESG initiatives a lot easier because the amount of capital expenditure you need when you buy a retail park versus a shopping centre is significantly lower, while the play on free parking also resonates with customers."

Cushman & Wakefield is aware of the improving performance of retail, says Bouvet, and has already strengthened its retail and leisure team to support clients across all its services, which include capital markets, debt advisory, leasing, valuation, asset services and sustainability.

Mark Phelps, who joined the agency from Avison Young in October, has brought 25 years of out-of-town leasing experience to the firm while Jack Lloyd, who also joined from AY, became a director in its investment team, completing a double swoop.

A month earlier, Tors Hayward and Alice Vaughan joined as associates in the firm's Central London retail and leisure team, moving from Hanover Green Retail and Quadrant Estates, and bolstering its team in the capital.

Bouvet previously said that the appointments reflected Cushman's strategic focus on London retail, where it manages the likes of The Crown Estate Portfolio, Shaftesbury Capital and the Knightsbridge Estate, as well as the two Westfields.

He says the company will continue to tailor its recruitment to follow the trends of the wider retail market and is looking to make additions to its shopping centre team, targeting partner and junior level hires.

“We feel that on the out-of-town side, we've probably done [our recruitment] and we will probably grow organically to support on the leasing side, but we feel as though we are in a better position, with Marcus Wood leading on the out-of-town.

"[Adding to the] shopping centre investment team is a strategic focus for us because we envisage there being north of £2 billion in transaction volumes in that [subsector] alone next year, and we want to grow our market share in that world.

"We are investing because we see the opportunity in that market. We have already done it on the retail park side, shopping centres are next, and we will have more people in [the first half of 2025] in our shopping centre investment team to capitalise on that."