Orchard Street Investment Management has struck a defining blow in the race for climate-conscious retail assets, acquiring Newcastle Shopping Park for €34.6m on behalf of a pension fund client from Patrizia. The transaction underscores institutional capital's urgent pivot towards ESG-compliant retail infrastructure as regulatory pressure mounts and occupier demands reshape the market landscape.
The 5.2-hectare freehold site in Byker, positioned just 2.7km east of Newcastle city centre on the A193, delivers immediate income security with €2.68m annual passing rent from blue-chip tenants including Asda, TK Maxx, M&S Outlet, JD Sports, and B&M. The 21,655 m² retail space anchored by Asda's 6,347 m² superstore, one of the North East's top performers, offers the defensive characteristics pension funds increasingly prioritise amid economic volatility.
What distinguishes this acquisition is Orchard Street's ambitious decarbonisation roadmap targeting A+/A EPC ratings through solar PV installation, gas system removal, and enhanced biodiversity measures. This approach positions the asset ahead of the curve as the UK government's 2030 net-zero retail targets approach, creating a significant competitive moat that could drive premium rental growth as non-compliant assets face obsolescence.
"Newcastle Shopping Park is a high-quality, income-generating asset in a thriving urban location with significant ESG potential. Its strong tenant mix, strategic location, and potential for further development make it a key addition to our growing UK portfolio," said Fergus Egan, Partner at Orchard Street. The acquisition represents the second asset for the firm's newly launched Decarbonisation Fund, signalling institutional appetite for climate-resilient retail infrastructure.
The asset's 8.9-year weighted average unexpired lease term (WAULT) with 83% of income secured against top-rated covenants provides exceptional downside protection. Patrizia's successful value-add strategy since 2020 delivered full occupancy ahead of disposal. "The completed disposal of Newcastle Shopping Park marks the successful conclusion of PATRIZIA's value-add strategy for the asset. Acquired in 2020 during challenging market conditions, the asset was actively repositioned to drive rent growth, enhance tenant mix and achieve 100% occupancy ahead of sale," confirmed Ker Gilchrist, Head of Investment Management UK at Patrizia.
KLM advised Orchard Street whilst Savills represented Patrizia in the transaction. The deal reflects growing institutional recognition that climate-compliant retail assets will command premium valuations as regulatory frameworks tighten and occupier ESG requirements intensify across the UK market.
People mentioned:
- Fergus Egan, Partner, Orchard Street Investment Management
- Ker Gilchrist, Head of Investment Management UK, Patrizia
Companies mentioned:
- Orchard Street Investment Management - UK commercial property investment manager
- Patrizia - German real estate investment company (seller)
- KLM - Property consultancy (advisor to Orchard Street)
- Savills - Property consultancy (advisor to Patrizia)
- Asda - Supermarket chain (anchor tenant)
- TK Maxx - Fashion retailer (tenant)
- M&S Outlet - Fashion retailer (tenant)
- JD Sports - Sports retailer (tenant)
- B&M - Discount retailer (tenant)
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