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Office supply continues to fall
Lambert Smith Hampton (LSH) reports in its annual South Coast office market briefing that the lack of supply remains critical and that take-up is suffering. It is expected that availability will fall to less than one million sq ft by the end of 2016.
An indication of the lack of supply and improving demand is that notable office buildings along the M27 corridor which had been vacant for some time are now fully let. These include Forum 1 and Spectrum – both on Solent Business Park, Spinnaker House in Fareham, and Pavilion in Hedge End. Almost all of this space has been let in the past 12 months. At the eastern end of the corridor, significant buildings such as Langstone Technology Park have over 90% occupancy. There is very little supply in Portsmouth city centre, and 1000 Lakeside is, in effect, fully let.
A decline in enquiries was seen during the second half of 2015, in particular in the fourth quarter. This is likely to
have been influenced in part by global economic factors and also the continued fall in supply. Opportunities for businesses to relocate have thus been constrained, prompting occupiers to renew leases within their current buildings. A possible fall in take-up in 2016 is thus expected. On a more positive note, the first signs of speculative development are emerging and rents are expected to continue their upward trajectory.
Andrew Hodgkinson, director of office agency for LSH's Southampton office, commented: "Despite the challenges in the global economy, the outlook for 2016 is positive, with the IMF forecasting 2.2% economic growth for the UK. While enquiry levels dropped towards the end of 2015, the average transaction size actually increased. Despite the well-documented issues with supply, occupiers with strong balance sheets are still planning for growth and we predict some significant lettings in the Solent region during 2016."
NatWest provides loan restructuring for major hotel development
NatWest has provided Solent- based luxury hotel group Harbour Hotels with loan restructuring for a £95 million development programme that will create 500- 600 new jobs across the south.
The programme comprises four separate developments including the company’s flagship scheme – the Southampton Harbour Hotel & Spa at Ocean Village – and new acquisitions in Chichester, Bristol and Brighton.
Working to a tight deadline, experts from NatWest developed a full financial restructuring which includes a revolving credit facility that will provide Harbour Hotels with the necessary flexibility to fund its forthcoming development and refurbishment projects.
The development programme specifically comprises:
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Southampton Harbour Hotel and Spa at Ocean Village
Due to open in 2017, the hotel will be Southampton’s only luxury, five-star standard hotel and will include 85 bedrooms, a ‘Harbour Spa’ with gym and swimming pool, Harbour Hotels’ award-winning Jetty restaurant concept, a luxurious rooftop champagne bar and bespoke interior design.
Chichester Harbour Hotel
This project comprises the refurbishment and extension of a landmark Grade II-listed Georgian hotel, with 37 bedrooms and a luxurious private cottage which overlooks the local Priory Park. Set within the city walls of Chichester, an extension will include 25 additional bedrooms, extra function facilities and undercroft parking.
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MARCH 2016
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