UK Automotive Site Development Enjoying Highest Activity Since Recession

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According to Adam Chapman, head of Knight Frank's automotive team, despite a major scandal in the form of the VW emissions crisis, proved to be only a minor blight on what has been a truly exceptional year. In the dealership sector, the UK car market has witnessed a prolonged period of unprecedented growth, and 2015 has seen the strongest sales performance since the recession. 
 
New car sales to October 2015 stood at 2,274,550 units - the best performance on record (Source SMMT). This increase in turnover, and profitability, has led to rising occupier activity and in turn greater investor demand. Knight Frank has advised on nearly half of the automotive investment transactions recorded, in a year where yields hit a record peak. The sector is now fully on the radar of mainstream investors, and very much established as an 'alternative sector' asset class. Business-to-business sales are flowing, and there is a new breed of foreign dealer group looking for presence in the UK.
 
Meanwhile site requirements are up 30% on 2014 and new-build development activity is the highest since the recession. We do expect car sales to level off in 2016, having reached sustainable numbers. Whilst we do not anticipate investment yields to harden further, we expect demand to persist as suppressed rental growth returns to the sector and outstrips inflation. The other main automotive sectors, namely petrol stations and service areas, have also witnessed buoyant conditions. In the petrol sector, as with previous years, the market has principally been characterized by oil company divestment, and the top five independent retailers continue to put further distance between themselves and the rest on the market by acquiring large packages of sites.
 
Elsewhere, after the sale of Roadchef for £377m at the end of 2014, the Service Area sector had plenty to live up to in 2015. However, it succeeded and then some, as we saw the sale of Moto, the largest operator by some margin, for a figure reported to be well over £1bn. It is easy to see why many consider 2015 to be one of the best years on record for automotive property.