One of the owners of the Bullring in Birmingham is to turn its back on London offices after forecasting further strong demand for retail sites in “winning locations”.
Hammerson, whose ownership portfolio also includes The Oracle in Reading, said the migration of shoppers towards large purpose-built developments should continue to work in its favour.
Rents in its London office estate stagnated last year and Hammerson said it will look to sell the investments over the medium term as it redeploys capital into retail assets in a bid to increase focus and scale.
The company said: “Our aim is to be the best owner-manager and developer of property within Europe.”
Retail occupancy at the end of 2011 was 97.8 per cent and despite weakening consumer confidence during the year sales at its centres outperformed national trends, with like-for-like rental income in the estate up 4.6 per cent.
Hammerson said the “polarisation” of the retail market continued last year with retailers focused on protecting sales and margins by exiting underperforming stores in smaller towns or weaker locations.
It added: “Many retailers have expanded their presence in winning locations, creating demand for modern, large, flexible accommodation such as Hammerson’s.”
The group predicted the valuation gap between prime and secondary properties would continue to widen.
Other high-profile shopping centres in its portfolio include Cabot Circus in Bristol, Highcross in Leicester, Union Square in Aberdeen and WestQuay in Southampton
Hammerson’s office portfolio is worth around £550 million and represents 13 per cent of its UK portfolio.
Investec Securities analyst Alan Carter said the sale plan represented a necessary self-help move by Hammerson but added that investors would be unsettled in the short term by the planned disposals.
He said: “The market may be concerned about the execution of the office asset sales and the decision to move exclusively into retail at a time when that asset class is not performing strongly in the UK.”
Hammerson announced adjusted profits of £141.6 million for the year to December 31, a drop of 2 per cent on a year earlier.