Sale and leasebacks drive surge in supermarket investment
The UK foodstore investment market recorded approximately £1.87bn of capital transactions in 2025, driven by an increase in sale-and-leaseback activity, according to Colliers’ latest UK Grocery Report.
This was up from £1.29bn in 2024 and ahead of both the five and ten year averages of £1.59bn and £1.52bn, respectively.
The report found that the increase in sale-and-leaseback activity from Asda and Morrisons, which are using the capital raised to reduce leverage, as well as Lidl, which is funding its store expansion. Altogether, around £943m of sale and leaseback deals in five portfolios were completed, close to the £1.01bn recorded in 2023.
Institutions and real estate investment trusts led buying activity, at 51% and 34% respectively, amid a constrained supply of prime stock. On the operator side, Asda emerged as the most traded grocer, responsible for 31% of all deals, while Tesco acquired £127.8m of its own stores – including two of the five largest single asset deals in 2025.
Mark Girling, executive director at Colliers, said: “Supermarkets again proved to be amongst the UK’s most sought after secure income real estate in 2025. With nearly £1.9 billion traded and buyers skewed to institutions, private capital and REITs, the sector’s defensive, often index‑linked cashflows remained in demand despite a challenging macro backdrop. We expect continued, but slowing yield compression this year for best‑in‑class assets driven by a chronic stock shortage and a flight to safety provided by grocery assets, the ultimate essential retail subsector.”