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Land Securities says its retail business is benefitting from a ‘flight to prime’ – and as shopper behaviour reverts to pre-pandemic trends

Bristol's Cabot Circus is one of Land Securities' regional shopping centres. Image courtesy of Land Securities

Bristol's Cabot Circus is one of Land Securities' regional shopping centres. Image courtesy of Land Securities

Land Securities says it’s benefiting from a ‘flight to prime’ among brands, and as digital natives open stores at a time when it sees customer behaviour reverting back to pre-pandemic trends. 

Online sales fell and in-store sales grew in the first half of its financial year, says the commercial and retail property developer, while it also suggests that “the material acceleration in online sales during the pandemic turned out to be only temporary”. Now online and physical channels are firmly interconnected, it says, and both digital native and multichannel brands are moving to its shopping centres to improve the customer experience. 

Land Securities says its strategic focus on major retail destinations and mixed-use urban neighbourhoods alongside Central London offices remains the right one as the pressures grow on secondary retail locations. 

In the first half of of its financial year, to September 30 2022, Land Securities reported revenue of £394m, up 25% from £315m a year earlier. Pre-tax losses of £192m were down from a pre-tax profit of £275m a year earlier, reflecting the effect of rising interest rates on the yield and value of the properties it owns. That particularly affects its London offices.

Major retail destinations make up 18% of the Land Securities portfolio, split 60/40 between shopping centres and outlets. There, it says, sales grew by 6.3% in the first half of its financial year, compared to last, and like-for-like sales – which strip out the effect of store – and business – openings and closures are now 3.6% higher than before Covid-19. The value of these assets grew collectively by 0.4% in the first half of its year, with shopping centre assets alone rising by 1.1% in value, although outlet values have fallen by 0.6%. 

Brands, it says, are now upsizing to these locations in order to benefit from higher levels of footfall while digital natives are opening stores in order to improve the customer experience and give shoppers another channel through which to shop. These trends, it says, will only be exacerbated by inflationary pressures on costs and profit margins. The company says it’s seeing strong leasing momentum – with 103 lettings worth a total of £12m in the first half of the year – although it also recognises that economic pressures on consumers could mean that falls back. As yet, it says, “we are seeing little sign of this”.

However, it does see global economic uncertainty ahead. “Decades of globalisation, fuelling growth and depressing inflation, have started to go into reverse, with rising geopolitical tensions adding to risks around energy reliance and supply chains,” it says in today’s half-year statement. “Positively, the turbulence in UK politics in late summer has started to normalise, although political stability remains fragile.” 

Despite this, it says, “London remains a top global city” and “the future of major retail destinations will be more positive than most, including many retailers themselves, thought two years ago,” while a need to remodel city centres in a sustainable way remains. Land Securities says it is well placed for any eventuality. That puts it in a good position “for any eventuality”, it says. 

Mark Allan, chief executive of Land Securities, says: ”The strategy we launched two years ago was underpinned by two key principles of sustainable value creation: focusing our resources on where we have genuine competitive advantage, and preserving our strong balance sheet. At the time, interest rates and property yields were very low, so asset values in many sectors looked expensive. Acting on this, we sold nearly £2bn of mature, low yielding assets while focusing new investment exclusively on opportunities where we saw clear value, or situations which offered long term optionality.

“Our competitive advantages remain our high-quality portfolio, our strong customer relationships, and the ability to unlock complex opportunities through our unique expertise, all of which is evidenced by our strong operational performance in the half year. Our business remains underpinned by a strong balance sheet, with a low 31% LTV, long 9.8-year average debt maturity and no need to refinance any debt until 2026. The successful execution of our strategy therefore means we are not only well placed for more challenging market conditions, but also have optionality to take advantage of new opportunities that will no doubt emerge as property markets continue to adjust to a new reality.’


Land Securities is working towards targets including net zero carbon on a science-based target by 2030. It also aims to reduce the embodied carbon in its future pipeline by 50% compared to a typical development by 2030, and is a member of both the ConcreteZero and SteelZero initiatives. 

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