The investment market for high street shops remains heavily polarised between areas of strong investor demand but with shortages of supply, and those that are still perceived (perhaps incorrectly in some instances) as too risky.

Currently the strongest demand, albeit coupled with the greatest shortages of supply, is for mid-sized lots of £10 million and above in strong towns. Typical of this would be the recent sale of the Sainsbury's, Sports Direct and Poundland block on North Street in Brighton which was marketed at £12.5 million - 5.15%. It attracted a great deal of institutional interest and is under offer well in excess of asking. Similarly, Aviva recently acquired the 37,000 sq ft block at 1-7 Spurriergate in York for £38 million, reflecting a yield of just under 4%.

The attractions of a strong location like York, and the imminent rent reviews for H&M and Zara, were enough to satisfy the fund that the block was worth £6 million more than when it was acquired by BP in 2009. Both of these assets have good growth potential.

Last quarter we predicted that yields would harden in the key regional cities as occupier demand starts to recover, and the last three months has started to prove this prediction true. Investors who six months ago were uncomfortable with regional voids, or impending breaks, are beginning to see them as an opportunity to move the rent or ERV.

However, this positivity is still patchy with the majority of investor demand focused on the best floorplates in the best pitches in the best regional towns and cities, as per Brighton and York above. Away from these locations yields are still high, often in excess of 10%, and these areas may well offer the best returns for retail property investors who are looking to enter the market in 2015-16.

Many of these markets have been blighted by high vacancy rates, and an investor perception that retailers need far fewer stores. However, as our comments in the occupational market section of this reports show, some secondary markets may be on the cusp of seeing a sharp fall in voids as retailer demand recovers.

The challenge for the canny investor is to find those towns and cities that are about to benefit from the recovery, yet are still priced as high risk. In particular we like town centre parades where there is an opportunity to knock several small units together, as well as locations where the overall vacancy rate might be high, but there is a strong trading scheme or parade on the prime pitch.

These will be the opportunities that will deliver the best mix of capital and rental growth, as well as having the added advantage of a more limited pool of potential buyers (though there are signs that demand for these is beginning to intensify).

Another reason to promote certain secondary locations as an investment target is the rental affordability. It is undeniable that retailing is getting tougher, and that retailer's margins are going to remain under pressure. For retailers and investors alike, finding a store and pitch where the Zone A is affordable with some growth prospects may well be a better strategy than focusing on prime markets where Zone A rents are already high and unlikely to go higher.