| the north east GVA PROPERTY MARKET REVIEW
Offices GVA’s latest quarterly Offices Report confirms that take-up of office space during the first quarter across the ‘Big Nine’ cities was the lowest level for five years. Activity was particularly low in the city centre market (23% below average), where only Cardiff recorded above average take-up. Activity was more resilient out-of-town, where Newcastle, Edinburgh, Liverpool and Bristol recorded above average take-up. In terms of deal size across the city
centres this quarter there were no transactions above 50,000 sq.ft to boost the figures. While mid-size deals were more common than average, there were fewer smaller ‘churn’ deals below 10,000 sq.ft. Tony Wordsworth, Director and Head of
Office Agency at GVA, Newcastle comments; ”In Newcastle, as is often the case the strongest activity has been in the out-of-town market this quarter with 170,000 sq.ft of take-up. Newcastle’s premier business parks of Cobalt and Quorum delivered three deals around 12,000 sq.ft with Accenture and Insure the Box both expanding their existing occupation. The largest out-of- town deal was a 33,000 sq.ft sale at
Tony Wordsworth
Doxford Business Park, whilst in the city- centre, Frank Recruitment’s 19,000 sq.ft occupation at The St Nicholas Building was the significant standout deal”.
Industrial GVA’s latest Industrial Intelligence Review (Spring 2017) shows that take-up of modern distribution units over 100,000 sq. ft. amounted to 28.5 million sq.ft during 2016, 25% above the five year average. Retailers continue to be the most active sector making up 62% of all take-up (34% e- commerce and 28% non-internet retail), followed by logistics providers (18%) and manufacturers (18%). The strong take-up levels over the past
year combined with a slowdown in speculative development mean that current availability of modern big sheds is at the lowest level for at least ten years. This represents just over six months’ supply based on past take-up levels. The lack of available stock is supporting
rental growth for small and mid-size industrial units. The high cost of development and an increase in build costs are impacting on the delivery of new schemes. In addition, the funding market
56
remains challenging with mainstream funds concentrating on core locations. Strong demand combined with limited
supply is supporting rental growth. Prime distribution net effective rents have increased by an average of 2.5% during 2016, the same as average distribution rental values (on the IPD index) and we forecast growth of around 1.7% pa this year and next. Danny
Danny Cramman
Cramman, Head of Industrial Agency at GVA, Newcastle added; “Restricted supply will support rental growth
performance for high quality existing stock and the significant weight of global capital looking to invest will maintain values. Brexit has not altered the fundamental benefits of investing in UK commercial property. Ultimately, commercial property is a long- term investment and we believe investors will continue to take a long-term view”. ”GVA are upbeat about the
distribution/logistics investment market, where there is a compelling long-term demand story, and coupled with long-dated secure income, significant opportunities exist. The demand created by major changes to retail distribution networks will not abate and, if anything, Brexit will serve to accelerate the rate of change as the pressure on retailers to achieve efficiencies becomes more acute”.
Investment Luke Symonds, Associate, Investment comments; “The North East property investment market had a sluggish start to 2017, with volumes in the first three months of £99M down 43% from the five year average”. “The slowdown is not due to faltering
demand, which has improved markedly since the initial Brexit shock despite election uncertainty. Institutional investors and property companies are sitting on large amounts of capital looking to find a home, while banks are offering cheap debt finance to
Luke Symonds
meet their lending targets. A lack of stock, or investable product, is the main driver for
the low Q1 figures, though this is starting to change as buyers take another look at previously unloved properties, particularly in the offices sector”. Alternatives, particularly hotels, are also
maintaining their good performance. LXi REIT recently funded the new Premier Inn next to Whitley Bay’s Spanish City redevelopment and some key sites in Newcastle are being transformed to accommodate big brand chain operators. The Private Rented Sector (PRS) is one
of the buzz topics for property investment, though one the North East has struggled with as values generally fail to stack up. Several developers have shown confidence to push projects forward and attract funding, however, including Panacea’s £37M scheme on Forth Banks and the 26 storey, 162 bed tower proposed on Rutherford Street, which recently achieved planning consent. The success of these ventures will be an indicator of Newcastle’s place among the UK’s top cities. Luke sums up; “In conclusion, despite
being slow off the blocks, 2017 holds a lot of promise for the property investment arena and buyer demand is proving resilient. Once the fog of uncertainty surrounding the June general election is lifted and our approach to Brexit clearer, we will have reason for genuine optimism”.
RELOCATED: 300 STAFF IN MOVE
C
ommercial property specialist Naylors has completed the letting of over
19,000 sq.ft of office space in Newcastle city centre to Frank Recruitment Group (FRG). The international technology
recruitment business has moved over 300 staff into the new offices which span two floors of St. Nicholas Building. An 11 year lease has been agreed and
Naylors is now close to completing a £1m refurbishment project at the building. In the past six months St Nicholas
Building has also attracted new tenants Sir Robert McAlpine and Lichfields, who have taken over 13,000 sq.ft across the 1st and 3rd floors of the 64,000 sq.ft building. Jessica Simpson, senior surveyor in
office agency at Naylors said: “We are finding that there is genuine demand for offices which have been refurbished to a high standard and provide first class working environments such as St. Nicholas Building. “Following this recent spate of lettings
we now only have 3,400 sq.ft of office accommodation available at St Nicholas Building together with 25 car parking spaces, which can be made available independently.”
COMMERCIAL PROPERTY MONTHLY 2017
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116
