Landsec has bought a five-unit retail property in an off-market move that strengthens its grip on Glasgow's premier shopping thoroughfare, Buchanan Street.
According to market sources the REIT paid £14.25 million, or a net yield of circa 6%, for 229-249 Buchanan Street, a building at the northern end of the famous retail thoroughfare and opposite Buchanan Galleries shopping centre, another of its properties.
Landsec, which confirmed the deal's completion with CoStar News, also owns 185-221 Buchanan Street, known as Buchanan Quarter, which sits next to 229-249 Buchanan Street and houses H&M, Vans and Sketchers. It completes a trio of retail-led properties it owns in the area.
Landsec acquired its latest Glasgow property from Hines, which bought the scheme in April 2016 as part of its investment mandate from Bayerische Versorgungskammer, targeting prime high street retail assets across Europe.
The scheme, let to Sostrene Grene, Holland & Barrett, Sky and JD Sports, is smaller in comparison to other properties in its portfolio, but it can be seen as a display of the REIT's commitment to Glasgow's retail market and one of the country's biggest shopping destinations.
A Landsec spokesperson said: "Since the launch of our strategy in 2020 we have been considering various acquisition opportunities that make financial and strategic sense. As one of the leading retail destinations in the UK, Glasgow is an important city for our business. This investment will allow us to enhance this end of Buchanan Street in line with local priorities."
Buchanan Street Focus
Buchanan Street is already an area where the group is looking to kick on, with the developer in the middle of planning a circa £825 million redevelopment of Buchanan Galleries.
The Galleries Masterplan, published last January, will be a "catalyst for the regeneration of Glasgow City Centre", according to the REIT, and is set to deliver the next generation of offices, as well as shopping, leisure, civic spaces and housing.
CoStar News understands that the developer is still working through the next steps for 229-249 Buchanan Street, but it feeds into the REIT's plans to invest into Glasgow in a series of smaller moves, along with other locations such as Lewisham and south east London.
This was something Landsec tipped in its financial results for the year ended 31 March 2024, when the group said it was evolving its plans to focus more on masterplans that "can be delivered in discrete incremental phases".
"This new approach will improve overall returns by retaining more of the existing income and growing this, alongside discrete development interventions," the REIT added.
Landsec wants to reposition its other Glasgow property, Buchanan Galleries, into a mixed-use destination, moving away from a solely retail scheme.
It began consulting on proposals to create a new mixed-use destination in Glasgow in 2021, having set out plans to grow this area of its business at its strategic review in 2020.
Investors spent more than £500 million on Scottish retail properties last year, 3% below the five-year average, as falling prices helped to unlock deals in the largely out-of-favour sector.
This included M Core's purchase of Princes Square on Glasgow’s Buchanan Street, which it bought from Redevco for £23.5 million, or a 9.8% net yield.
Lismore Real Estate Advisors advised Hines at 229-249 Buchanan Street.