British Land’s retail warehouses lost 13.9 per cent of their value with an outward shift in equivalent yield of 100 basis points, despite ERV growth of 3.6 per cent which comfortably outperformed the market. And BL’s shopping centres saw a fall in value of 10.3 per cent, with an outward yield shift of 70 bps. Meadowhall in Sheffield, British Land’s biggest retail asset, saw its valuation slashed by £160m over the year to £1.505bn, a fall of 9.6 per cent.

And chief executive Stephen Hester warned shareholders to expect further falls. “We remain in challenging investment market conditions,” he said. “There are tentative signs of improvement but it’s clear the investment market will give us a bit more of a decline to come.”

However BL’s head of retail Andrew Jones said that the company was focusing on asset management initiatives to drive rents forward and maintain occupancy levels. Across the retail portfolio voids stand at just 2.5 per cent, and 450,000 sq ft of shopping centre space has been let in the past year, including 250,000 sq ft at Meadowhall. The most significant recent deal is the letting of a 40,000-sq ft flagship store at Meadowhall to Topshop.

The company successfully anticipated the downturn by selling some key properties including the Fort Kinnaird and Speke retail parks and the East Kilbride shopping centre, described by Jones as “properties where the rental growth prospects were weakest.”

And at the same time BL has shunned shopping centre development, because of concerns over tenant demand. “Although demand for large floorplates is good the depth of demand for standard units is thinning,” said Jones, “and we think many developments will find it challenging to open more than 80 per cent let.”

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