MARKET INSITE 2020 GREAT COMMERCIAL PROPERTY DECISIONS - Innes England
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
MARKET INSITE GREAT COMMERCIAL PROPERTY DECISIONS 2020
MARKET INSITE 2020 3
WELCOME TO
MARKET INSITE 2020
The political turbulence of last year looks to be behind us and the initial signs
in 2020, especially from the Capital Markets, are encouraging.
In 2019, investment into UK property fell by over Our Building Surveying team continues to make
20% compared with the previous year, but the East great strides, and now has a dedicated Expert
Midlands remained level at £1.35bn - highlighting the Witness and Insurance surveyor to help disputes be
attraction of our region. resolved as promptly as possible.
The market data follows and it is refreshing to For the second year running, we’ve signed the Vision
see that speculative development has rewarded a for Literacy Business Pledge and will be working
number of developers and investors, with Grade A with the Literacy Trust actively trying to close the
take-up doubling in industrials in Leicester. literacy gap. In particular, we will once again run the
Words for Work programme, where we open our
Most importantly, the East Midlands continues to doors to the next generation and help young people
house a range of outstanding businesses in a variety see that the world of work is not as imposing as it
of sectors, and our team are delighted to support might appear.
their property needs, be it growth, refurbishment
or relocation. Please don’t hesitate to contact us to There are changes and opportunities ahead, not
understand our thinking behind the numbers. least the impact of property assets on sustainability
and community and we look forward to working
People are our greatest asset and we’ve been with you moving forward.
pleased to welcome new additions to our growing
team, especially in property management, to
Matthew Hannah
congratulate well-deserved promotions for 2020,
Managing Director
and celebrate our graduates who were successful in
mhannah@innes-england.com
achieving their professional qualifications.
0115 924 3243
Crocus Place, Nottingham
1 2
MARKET INSITE 2020 5
HIGHLIGHTS:
DERBY
2019 presented its challenges with a noted slowdown
during the lead-up to both Brexit dates and the General
Election. Unsurprisingly, the resulting uncertainty led
to reduced transactions, particularly in larger stock.
Locally, conditions were compounded by the ongoing
highways improvements.
Fortunately, our major employers Rolls Royce, Bombardier and Toyota grabbed
the headlines with a string of awards, contracts, and announcements around
Greener Transport, cementing the city’s reputation for innovation. Equally
positive was the opening of a new, high-profile Jaguar Land Rover car
dealership, which has transformed the former Cattle Market site on the West
Meadows Industrial Estate.
Driven by a shortage of transactions, industrial take-up fell by some
120,000 sq ft for the year, with the sale of the former Davis Derby unit on
Chequers Lane being one of the few standout deals. There were, however,
plenty of smaller local market transactions.
3
In terms of supply, the speculatively-built Derby 370 skews the figures by
accounting for some 51% of overall standing stock. This aside, availability
stands at its lowest level since 2015 which has helped rents to climb.
Office take-up has fallen by 80,000 sq ft, the lowest since 2015, with take-up
dominated by transactions under 5,000 sq ft. The traditional churn on Pride
Park has been hampered by continued road works, although that did not deter
French engineering giant Alten from opening a new 12,000 sq ft HQ to service
new Rolls Royce and Bombardier contracts. Office availability has fallen by
110,000 sq ft with further space having been lost to residential, but some
second-hand office stock is now being refurbished with the launch of CUBO and
120 Friar Gate. Rents have remained stable.
The online retail revolution has continued, higher void rates have become
evident within the Cathedral Quarter but for every occupier lost at intu another
is welcomed with Boss, Hobbs and Whistles all opening in 2019.
1. First Panattoni’s Derby 370
2. Jaguar Landrover dealership | Picture: Cactus Images
3. Bear Coffee | Picture: Cactus Images
DERBY MARKET INSITE 2020 7
OFFICE INDUSTRIAL INVESTMENT RETAIL
A lack of Grade A space continued to hamper activity with only Take-up was 326,400 sq ft, with the largest transaction being Investment activity rebounded to its highest level since Retail rents remained static in Derby for a further year although
122,400 sq ft of lettings recorded. There was an absence of the sale of 42,957 sq ft to Burrows Recovery for £2.5 million. 2013/14, with £281m of transactions. Activity was dominated there were notable additions to the intu Derby Shopping
larger lettings, with take-up dominated by transactions below Grade A space accounts for 65% of total availability, although by the sale of a 50% stake in intu Derby to Kuwaiti-backed Centre which welcomed new retailers Hugo Boss, Hobbs and
5,000 sq ft. Supply fell back to its lowest level in more than a the figures are skewed by the availability of Derby 370, First Cale Street Partners LLP for £186.3m, reflecting a net initial Whistles. Local company Bear Coffee also acquired new space
decade as occupiers continued to target second-hand space. Panattoni’s 370,000 sq ft speculatively-built warehouse at yield of 6.6%. Several larger industrial transactions completed within the shopping centre. Elsewhere, Mike Ashley-backed
Grade A supply accounts for only 4.3% of stock on the market. Derby Commercial Park. The expanding ecommerce market in the final quarter of the year, the largest being Aver Sports Direct and USC are close to opening their combined
Both prime and secondary rents remained stable at £16.50 and continues to drive rents, with prime rents up by 3.8% and Properties forward purchase of the final phase of Henry Boot store in the 53,000 sq ft former BHS on St Peter’s Street, due in
£9.00 per sq ft respectively. secondary rents up by 12.5%. Developments Markham Vale North scheme in Chesterfield for Spring 2020.
an estimated £35m.
Take-up (000 sq ft) Take-up (000 sq ft) Value of Investment Transactions (£m) Prime Retail Rents
Grade A Good second-hand Poor second-hand Grade A Good second-hand Poor second-hand High Street & Centres (£ sq ft)
350
£318.6
2019 79 43 2019 63 183 80 300 £280.6 2019 £150
2018 117 88 2018 69 240 137 250 2018 £150
2017 8 107 57 2017 177 217 119 200 £178.6 2017 £150
£153.2
2016 113 88 2016 131 286 86 150 2016 £150
2015 43 105 89 2015 376 509 239 100 2015 £150
£107.6
0 50 100 150 200 250 300 0 200 400 600 800 1000 1200 50 0 25 50 75 100 125 150 175
0
2015 2016 2017 2018 2019 Prime Retail Rents
Availability (000 sq ft) Availability (000 sq ft)
Grade A Good second-hand Poor second-hand Grade A Good second-hand Poor second-hand Out of Town (£ sq ft)
Bulky goods Open A1
Prime Yields
2019 18 250 148 2019 470 138 116
Office Retail Industrial
2019 £25.00 £30.00
2018 18 288 221 2018 470 185 236
2018 £25.00 £30.00
2017 162 261 2017 173 380 262 9%
2017 £25.00 £30.00
2016 23 215 251 2016 69 306 198 8%
7.00% 7.00% 7.00% 6.75% 2016 £25.00 £30.00
2015 144 406 2015 5 280 299 7% 6.50%
5.50% 5.75% 5.75% 2015 £25.00 £25.00
0 200 400 600 800 0 250 500 750 1000 6% 5.50% 5.50%
5% 5.50% 5.25% 0 5 10 15 20 25 30
5.00% 5.00% 5.00%
4%
Prime Rents (£ sq ft) Prime Rents (£ sq ft)
Secondary Primary Secondary Primary 2015 2016 2017 2018 2019
2019 £9.00 £16.50 2019 £4.50 £6.75 Prime High Street
£150
Investment by Sector
2018 £9.00 £16.50 2018 £4.00 £6.50
2017 £8.50 £16.50 2017 £3.25 £6.00
2016 £8.50 £16.50 2016 £3.25 £5.75 per sq ft
2015 £8.50 £16.50 2015 £3.00 £5.50
0 2.5 5 7.5 10 12.5 15 17.5 0 1 2 3 4 5 6 7
27% Industrial Prime bulky goods
Prime headline rents Prime headline rents
6% Other (inc leisure)
1% Office
£25
per sq ft
£16.50 £6.75
66% Retail
per sq ft per sq ft Prime open A1
Secondary rents Secondary rents
£30
per sq ft
£9.00 £4.50 Transactions completed
£280.6m
per sq ft per sq ft
1 2
MARKET INSITE 2020 9
HIGHLIGHTS:
LEICESTER
This year’s analysis projects a robustness in the local
economy, despite the substantial economic and political
uncertainties that have affected the wider picture.
Industrially, the decision to build speculatively has proved decisive, with a 96%
rise in the take-up of Grade A space, satisfying the demand from the big box
logistics operators but also, in view of a number of smaller schemes, more
local occupiers. Important transactions included the letting of 100,837 sq ft
to JLG Power Towers at Leicester Distribution Park, 578,000 sq ft to the VF
Corporation at Bardon and 330,000 sq ft to 4PL on behalf of Alibaba at Leicester
Commercial Park.
Availability remained broadly similar to 2018, although saw a reduction in Grade
A units due to the high levels of take-up within this sector.
The reduction in office take-up reflected the lack of any one large transaction,
with 2018 having been dominated by the 80,000 sq ft letting to Access Group
in Loughborough. Activity was still however brisk, with a number of significant
transactions, including the letting of 22,000 sq ft to Global Payments in
3 Thurmaston, and at Grove Park 16,000 sq ft to Sytner within the former
HSBC building.
Office availability remains similar to the longer-term average, with Grade A
availability lost during the year, replaced in the main by No. 1 Great Central
Square that is due to be completed shortly.
Alongside the offices at Great Central Square will be a 154-room Novotel
and six-storey Aparthotel by operator Adagio. This will complement the
neighbouring Long Harbour-backed 297-apartment PRS development which
completed in August. A new hotel is also being built above the Haymarket
Shopping Centre, with the council funding improvements to the car park,
shopping centre and construction of a 67-bedroom Travelodge.
In retail, Sports Direct opened at the former BHS in Gallowtree Gate which
they bought in 2017, introducing their new elevated concept combining Sports
Direct, USC and Flannels all under one roof. Work continues at the region’s
premier out of town shopping destination Fosse Park, with the new extension
due to open towards the end of 2020.
1. Leicester Distribution Park
2. Fosse Park |Picture: Mark Lee
3. Great Central Square | Picture: Mark Lee
LEICESTER MARKET INSITE 2020 11
OFFICE INDUSTRIAL INVESTMENT RETAIL
Take-up moved below the 10-year average for the city and activity Take-up remained above the 10-year average, with activity Investment activity fell to the lowest level since 2015. Prime High Street rents in Leicester remained static following
continued to be focused on smaller transactions, with two thirds of 2.3m sq ft. Activity was dominated by lettings of Grade The industrial sector attracted the highest level of interest, two years of increases. Within the city centre, the most
of take-up in lettings below 10,000 sq ft. Grade A supply remained A space, accounting for 64% of transactions with a number accounting for 56% of the total. The largest deal was the £55m notable opening came at Gallowtree Gate with Sports Direct/
relatively stable, accounting for 18% of total stock on the market. of larger deals during the year. Strong demand for space has forward funding of a 525,000 sq ft logistics development at USC relocating to the former BHS premises. Mowgli and Tim
Prime rents remained stable but with occupiers continuing to maintained growth in rents, with prime rents reaching a new EDMC Business Park, Castle Donington by AEW UK and Allianz Hortons both opened outlets, with highly-rated Thai restaurant
target second-hand space, secondary rents continued to rise - record level of £7.00 per sq ft, while secondary rents have Real Estate. The final quarter saw Maya Capital complete on Giggling Squid to follow soon, further enhancing the St Martin’s
equating to a growth of 8.4% a year over the past five years. moved to £5.50 per sq ft, an increase of 4.8% on the year. the 107,100 sq ft multi-let offices at Colton Square, with the area. The £150m extension of Fosse Park continues to take
purchase price reflecting a net initial yield of 8.3%. shape with opening due late in 2020.
Take-up (000 sq ft) Take-up (000 sq ft) Value of Investment Transactions (£m) Prime Retail Rents
Grade A Good second-hand Poor second-hand Grade A Good second-hand Poor second-hand High Street (£ sq ft)
450
£412.7
2019 86 123 102 2019 1456 573 240 400
2019 £225
2018 104 204 109 2018 743 1178 285 350 £322.8
2018 £225
300
2017 33 193 66 2017 671 1036 443
2017 £216
250
2016 81 223 177 2016 1989 972 323 £256.0
200 2016 £200
2015 91 225 142 2015 565 1132 439
150 £172.6 £181.9 2015 £200
0 100 200 300 400 500 600 0 500 1000 1500 2000 2500 3000 3500 100
0 50 100 150 200 250
50
0
Availability (000 sq ft) Availability (000 sq ft) Prime Retail Rents
Grade A Good second-hand Poor second-hand Grade A Good second-hand Poor second-hand 2015 2016 2017 2018 2019
Out of Town (£ sq ft)
Bulky goods Fosse Retail Park
2019 102 320 140 2019 1694 1325 525
Prime Yields
2018 98 376 144 2018 2024 1000 255 2019 £45.00 £110.00
Office Retail Industrial
2017 62 369 188 2017 979 1478 230 2018 £45.00 £110.00
2016 76 297 236 2016 565 1372 350 8% 2017 £45.00 £110.00
7.00% 7.25%
2015 67 386 323 2015 476 2281 304 7% 2016 £45.00 £105.00
6.25% 6.00% 6.00%
0 200 400 600 800 1000 0 500 1000 1500 2000 2500 3000 3500 6% 2015 £45.00 £105.00
5.00% 5.00% 5.00%
5% 5.50% 5.50%
5.00% 5.00% 0 20 40 60 80 100 120
4.75% 4.50%
4% 4.25%
Prime Rents (£ sq ft) Prime Rents (£ sq ft)
3%
Secondary Primary Secondary Primary
2015 2016 2017 2018 2019
2019 £12.00 £18.00 2019 £5.50 £7.00 Prime High Street
£225
2018 £11.00 £18.00 2018 £5.25 £6.75
Investment by Sector
2017 £10.50 £17.50 2017 £5.25 £6.50
2016 £9.00 £17.50 2016 £4.50 £6.00
per sq ft
2015 £8.00 £17.50 2015 £4.25 £6.00
0 2.5 5 7.5 10 12.5 15 17.5 20 0 1 2 3 4 5 6 7
Prime bulky goods
£45
12% Retail
56% Industrial
Prime headline rents Prime headline rents
per sq ft
£18.00 £7.00
14% Other (inc leisure)
18% Office
per sq ft per sq ft Prime Fosse Retail Park
Secondary rents Secondary rents £110
per sq ft
£12.00
per sq ft
£5.50
per sq ft
Transactions completed
£181.9m
1 2
MARKET INSITE 2020 13
HIGHLIGHTS:
NOTTINGHAM
2019 witnessed the return of cranes to Nottingham city
centre’s skyline. Work began on Sladen Estates HMRC
offices and Nottingham College’s new £58m City Hub
campus, next to Broadmarsh where the contractors
are on site for the £90m transformation of the Shopping
Centre. The new Central Library, bus station, and car
park are also well underway.
New build office activity wasn’t just limited to the city centre though, with new
schemes at Edwalton Park and Nottingham Science Park. Equally well-received
was Shoby Properties’ refurbishment of City Buildings to provide 32,000 sq ft of
much-needed quality office accommodation.
Overall 2019 office take-up was down from the previous year although 2018 had
been bolstered by the HMRC deal and underlying transaction levels remained
relatively consistent year on year.
There was also significant new development in the industrial market with
3 18 new units being speculatively constructed by Chancerygate in their joint
venture with Hines at Trent Gateway, Beeston to provide a total of 155,000 sq ft
of welcome Grade A industrial accommodation. Nearby Henry Boot continued
to make good progress in their redevelopment of the Imperial Tobacco site with
the significant demolition project nearing completion towards the end of the
calendar year.
Industrial transactions totalled around 857,000 sq ft in line with 2018 but
while the total number of transactions fell, the average deal size for 2019 at
10,000 sq ft was up by almost 15% on the previous year.
On the retail side, Lidl were active in the city acquiring sites at the former
Beechdale Swimming Baths and agreeing a deal to buy the Waitrose site in
Wollaton. Waitrose also sold five acres at Edwalton where, on the adjacent
site, Aldi have consent for a new supermarket and have started work.
The biggest deal in Nottingham came at Giltbrook Retail Park with Marks
and Spencer signing up to take 60,000 sq ft of space in the former BHS store.
In the roadside market, Pendragon opened a new multi-million-pound Jaguar
Land Rover dealership on NG2 business park and The Car People, backed by
Sytner, have agreed a lease on the 105,000 sq ft former Homebase store for
a car supermarket.
1. HMRC offices | Picture: Cactus Images
2. Trent Gateway, Beeston | Picture: Cactus Images
3. Elizabeth Garrett Andersen building, Nottingham Science Park
NOTTINGHAM MARKET INSITE 2020 15
OFFICE INDUSTRIAL INVESTMENT RETAIL
Take-up fell below the 10-year average after the record levels in Take-up remained broadly in line with the 10-year average, Investment activity set a new peak level at £513.2m, marginally The biggest retail deal of the year came at Giltbrook Retail
the previous 12 months. Total take-up was 387,200 sq ft, with with 856,400 sq ft of deals. Activity was focused on second- ahead of the previous peak in 2017. Industrial transactions Park with Marks and Spencer committing to a new
the main slowing in activity seen in Grade A space. Almost 50% hand space, while supply edged up slightly, largely due to dominated as investors continued to target the sector. The 60,000 sq ft store. In the city, work finally started on the
of Grade A take-up was at Shoby Investments new city centre Chancerygate/Hines’ new scheme at Trent Gateway, Beeston. largest transaction was the £120m sale and leaseback of long-awaited Broadmarsh Shopping Centre redevelopment.
scheme City Buildings, Carrington Street. Supply remained The scheme provides 155,268 sq ft, with units ranging from the 1.8m sq ft Sports Direct HQ at Shirebrook by Malaysian Nottingham also welcomed a number of new retail and leisure
relatively stable at 597,200 sq ft although most is out of town. 2,300 sq ft to 49,811 sq ft. Prime rents have continued to set employee fund KWAA Logix Sportiv. Alternative sector occupiers with Cosy Club being the pick of the bunch, agreeing
The differential between prime and secondary rents narrowed as new peaks, rising to £7.00 per sq ft, with secondary rents up to investment continued to play a significant role with the £45m a deal to take the former Victoria Club on Victoria Street.
secondary rents moved to £15.00 per sq ft. £5.75 per sq ft. forward purchase of the student accommodation scheme at
York Place Nottingham by Brookfield Asset Management.
Take-up (000 sq ft) Take-up (000 sq ft) Value of Investment Transactions (£m) Prime Retail Rents
Grade A Good second-hand Poor second-hand Grade A Good second-hand Poor second-hand High Street & Centres (£ sq ft)
600
£510.2 £513.2
2019 64 243 80 2019 15 564 277 500 2019 £275
2018 370 263 101 2018 22 414 421 400 2018 £275
2017 209 188 81 2017 164 629 356 300 2017 £275
£297.7
2016 194 138 66 2016 130 569 227 200 £267.3 2016 £257
£226.6
2015 286 237 63 2015 55 640 318 100 2015 £250
0 200 400 600 800 0 200 400 600 800 1000 1200 0 0 50 100 150 200 250 300
2015 2016 2017 2018 2019
Availability (000 sq ft) Availability (000 sq ft) Prime Retail Rents
Grade A Good second-hand Poor second-hand Grade A Good second-hand Poor second-hand Prime Yields Out of Town (£ sq ft)
Office Retail Industrial Bulky goods Open A1
2019 189 287 121 2019 174 639 96
2018 179 312 110 2018 34 644 99 8% 2019 £25.00 £42.50
2017 265 331 139 2017 16 515 236 7% 2018 £25.00 £42.50
6.00% 6.00% 6.00% 5.75% 6.00% 2017 £25.00 £39.00
2016 318 403 199 2016 51 1020 362 6%
5.25% 5.25% 5.00% 5.00% 5.25%
2015 351 532 207 2015 68 939 498 5% 2016 £25.00 £35.00
4.75% 4.75% 4.75% 4.75% 2015 £25.00 £35.00
0 500 1000 1500 1500 2000 0 500 1000 1000 1500 2000 2000 2500 4% 4.50%
3% 0 10 20 30 40 50
2015 2016 2017 2018 2019
Prime Rents (£ sq ft) Prime Rents (£ sq ft)
Secondary Primary Secondary Primary
2019 £15.00 £20.00 2019 £5.75 £7.00
Investment by Sector Prime High Street
2018
2017
2016 £13.00
£14.50
£14.50
£19.50
£20.00
£20.00
2018
2017
2016 £4.50
£5.00
£4.75
£5.75
£6.25
£6.25 £275
per sq ft
2015 £13.00 £19.50 2015 £4.50 £5.75
0 5 10 15 20 25 0 1 2 3 4 5 6 7 4% Office
58% Industrial
Prime bulky goods
Prime headline rents Prime headline rents
24% Other (inc leisure)
14% Retail
£25
per sq ft
£20.00
per sq ft
£7.00
per sq ft Prime open A1
Secondary rents
Secondary rents
£42.50
per sq ft
£15.00 £5.75 Transactions completed
per sq ft
per sq ft
£513.2m
Did you know we can help you make a
great decision in these areas:
Acquisition Expert Witness
Asset Management Landlord and Tenant
Business Rates Project Management
Building Surveying Sales and Lettings
Dilapidations Valuation
Derby 01332 362244 – Nick Hosking | nhosking@innes-england.com
Leicester 0116 255 5455 – Peter Doleman | pdoleman@innes-england.com
Nottingham 0115 924 3243 – Craig Straw | cstraw@innes-england.com
innes-england.com
Brochure Design. Optima Design| Optimadesign.co.uk
©2020. The content of this brochure may not be copied, reproduced or distributed without permission of Innes England.
You can also read
