Newsletter December 2013: Garden centre owners and operators have reasons to be cheerful this year, albeit tempered with a degree of uncertainty. Consumer confidence is on the rise, expansion plans are underway and the sector continues to outperform the high street. Many garden centres believe their industry to be recession proof…maybe it is!

Gilbert Evans has maintained its reputation as the sector’s leading property advisor, handling more deals than anybody else. In the last 12 months we have advised on over £50 million of transactions, sales and acquisitions and have seen a marked increase in demand for garden centres across all areas of the country. There has been significant activity at all levels with demand stronger than we have seen for many years, with values arguably increasing for the larger centres.

The Garden Centre Group (TGCG) has undoubtedly been the industry talking point with the deal of the year to date and its return to the garden centre acquisition market has been, in property terms, the most significant change to the sector over the last 12 months. We advised owner Terra Firma and TGCG on its first acquisition of a major chain of centres, the £40 million turnover seven-centre Garden & Leisure Group. Earlier in the year Gilbert Evans acted as advisor to the Barton Grange Group on the sale of its Bolton Garden Centre to TGCG. An appetite to expand is shared by groups and large independents across the country and we have advised major players including Blue Diamond, Notcutts and Squire’s Garden Centres. The Tesco-owned Dobbies remains a powerful force and should not be underestimated. It is one of the UK’s leading garden centre businesses with 32 stores and harbours major growth plans. The first joint Tesco-Dobbies centre that has recently opened in King’s Lynn could well form a template for the way forward.

Banks are showing increasing confidence in lending to the garden centre sector but still not as freely as before. Frustratingly some bank valuers simply do not understand garden centre values with many valuations being too low, causing problems for vendors and purchasers alike.

As anticipated, leasehold deals remain a popular route for expansion and this trend is set to continue. The vast majority of groups are now considering leasehold transactions and this marks a significant change from just a few years ago. The largest single site garden centre deal for many years was Blue Diamond acquiring the Grosvenor Garden Centre on a 35-year lease last year and since then we have seen a number of other operators expanding via the same route.

The garden centre sector benefits from strong leaders – when TGCG, Dobbies and the other groups are trading well and expanding, it underpins the whole sector. The city likes it and so do consumers. The industry appears to be continuing to adapt, adopt and
improve its retailing skills and, as a consequence and despite the vagaries of the weather, is in far better health than the high street.

For more information on garden centre opportunities, please contact Mike Gilbert.