Tag Archives: Market

Feb 13 2012

The Nottingham Office Review 2011

It’s obviously that time of year when we look back at the previous year – in an effort to make sense of what is going on in our market.

The assembled participants - and me enjoying myself despite the fact is was before 8am...

The Nottingham Office Review is a collaborative document which is drawn together by CoStar – but takes information from all of the key Nottingham Agents. they then try to analyse what has happened in the local market.

This years review can be found here.

It was my colleague Craig Straw who presented the findings on behalf of the Forum assembled. I don’t need to replicate the report – but it is fair to say that Nottingham held its own last year. The number of deals were reduced but what did happen made for an ‘ok’ year. We have certainly done better than Birmingham which has a near 20% vacancy rate – against our approximate 13%

We have nearly 2.3m sq ft of offices in the pipeline – which should hold us in good place for future occupiers.

But in the meantime what I did like were the reasons to look at the City – I am happy to cut and paste…

* 8th largest recruitment catchment in the UK
* Over 1.1 million people in the journey to work area
* Over 98% of the UK market within a 4 hour drive of the city
* Access to 55,000 students studying at Nottingham’s two universities
*Home to global businesses including Capital One, Experian, Alliance Boots, Speedo and E.On
* A leading Science City in the UK with research excellence in BioSciences, Low Carbon Technologies and Digital Media
* Cutting edge global digital infrastructure
* Award winning integrated transport network with two new tram lines under construction
* Top 6 retail destination
* The UK’s most energy self-sufficient city

Jan 27 2012

2011 – a miserable year for property…

I guess we knew what the headlines were going to be – and they haven’t disappointed…even if they are disappointing!

One trillion pounds - piled up next to an arctic....

In the commercial market in 2011 the value of UK commercial property investment transactions in Q4 2011 was £8.69 billion, down 25% on the same period for 2010. We were hit hard by the lack of liquidity in the market and by the Euro-Crisis.

UK house sales fell last year to 869,000, one of the lowest totals on record, HM Revenue & Customs has said. House price growth was just 1% – which in the circumstances was probably fairly good!

This seems to have been a long depression – the back end of 2008 was when we saw the writing on the wall – that is nearly 3.5 years ago. I don’t think we ever anticipated the market to flat-line for so long.

This week the UK reached £1tn (£1,000,000,000,000) in debt. To understand what one trillion looks like – go and have a look at your doormat – 1 Trillion of them would cover the whole of England, Scotland, Wales and Northern Ireland. Alternatively if you had spent £1m every day since Jesus was born, you would still have some change!

The really worrying thing is that there is little sign of a change in the short term. However, in the medium term I am involved in a number of major projects which could come to fruition in 2013-15. They have a long lead in, but I take some comfort in the fact that people are considering them. Of course this Parliament must be dissolved by May 2015, it is unlikely that the current incumbents will want to go to the Country with the current state of play.

Further I suspect that there will be some monies available starting next year. We will have the Olympics out of the way – I doubt we will ever know how much that has cost us. The budget of £9.3bn is apparently robust, money we can ill afford in the current economic climate!

Perhaps it is better in the middle distance than we think? I hope so!

Oct 27 2011

The market – catch 22

It doesn’t help a fragile market to have confidence wobbles. Talking a market down is easy – and worryingly, in my view, we have become so used to bad news that is almost habit forming? We have forgotten the good times!

Some of the work I do is valuing property assets. It is not always easy at the moment to pin down values – especially when the evidence we use is rather thin! Valuers are always looking backwards, we rely on deals done. The valuation methods don’t use predictions of where a market will be! That’s a sure fire way to get sued for professional negligence.

Back in 2008 we invoked a clause in our valuations which is lovingly know as Guidance Note 5 – Valuing Uncertainty. It effectively puts the recipient of a report on notice that the valuation provided has a bit of a warning flag attached. We may not have been able to be as certain as we would like – usually due to the lack of comparable evidence.

This clause was gradually dropped at the market returned to a more stable state – even if the number of transactions was reduced.

But last week we were alerted to the fact that some of the National firms were starting to use the clause again – predominantly where they were involved in International (notably European) work. I guess they can see some of their work being impacted by the current financial mess in Europe.

We haven’t invoked the clause yet, but is remains under review.

You can see that this would not be a great thing to happen. The market doesn’t need a knock at this time. But we may have no alternative if things don’t get better!

Jan 28 2011

Shopping the old way?

Over New Year we were in Oxford – a favourite town which we travelled to frequently when our daughter Jade studied there for three years. It has been a couple of years since we had been – but not much has changed in this scholarly place. Nor do I suppose it will over the next few hundred years!

But one of my favourite parts of the town is the Covered Market. It’s been there since 1774 and was once the trading heart of Oxford – built to tidy the streets of the then numerous ad-hoc stalls. At the time of its opening meat could only be sold from within the walls – which would have added to the improvement in food standards no doubt!

Today it has traditional shops – butchers, fruitiers, cake shop, cheese shop, a chocolatier and many others.

It is a much more interesting shopping experience than the supermarkets we frequent and have grown used to in our modern cities. It has lanes of shops, narrowing to keep you close to shop windows, but it also has a central square and four separate entrances. You are enticed into looking down the lanes to ‘find’ shops. There are surprises. It is interesting.

It reminded me of the Farmers Market I visited in Los Angeles in September 2009. And I found a similar place in a Shanghai at the Tai Kang Road Market – a myriad of small lanes and tiny shops selling local wares. Both had a slightly grungy fee. But you feel safe there.

These are not expensive marble laid malls with mirrors and large expanses of glass. They have a human scale, are relatively cheap in construction and are interesting to the eye.

I think I prefer to buy my stuff at such a place if I can…

Modern malls have a place, but they can have that ‘so what’ feel. They are formulaic because of the national multiple retailers. Markets, on the other hand, are reflections of the personalities of the shop-keepers, not of some corporate buying office somewhere in London. This appeals to me!

Jan 4 2011

2011 – wtf?

If ever there was a time when it was difficult to read the tea-leaves then surely that time is now. 2011 looks to be one of the most challenging periods ahead for property.

Don’t get me wrong, I am not for talking a market down – it doesn’t help my business, or me – but the background is, as the saying goes, as pretty as an airport.

So what will 2011 bring?

Well, a VAT increase today to 20% for starters – an increase in the price of most goods of 2.1%. Individuals can’t recover the VAT – and we will almost certainly see prices of goods increase as suppliers struggle to absorb the increase.

Then the interest rate, which is unlikely to remain at its all time low of 0.5%… Some pundits are predicting it will be at around 2% by the end of the year. This impacts on mortgage rates and borrowings generally, which is bad news for borrowers, but maybe better for savers.

Inflation in November was 3.3% which was way above the Government target of 2%, although it could be that the interest rate might be the stick to beat this down. Inflation is usually good for property prices – except of course we have little or no growth in wages. It was interesting to see that the average house price in the last 12 months has gone up by £5,000.

But the real elephant in the room is the unemployment figures – which now stand at 2.5 million. In the East Midlands 8.9% of the workforce are out of a job.

The Comprehensive Spending Review has only just started – and there was little to cheer about in there as far as I could see. In fact the imposed savings are likely to add to the unemployment figures.

None of this paints a rosy picture.

We have already seen retailers having to cut prices (the bad weather didn’t help them) in the run up the Christmas which is far earlier than they have ever had to do before. It seems to me that January sales have been going for some time. We have plenty of vacant shops in the peripheral parts of Nottingham – and they don’t look as though they are filling up any time soon.

We have empty offices too, most of which are in ageing stock. The future of the office market is another story. We are working in a different way to that of ten or 20 years ago. Those changes are likely to continue – placing even more pressure on these monolith’s. However, our industrial market is holding up pretty well – the market is much more in balance.

So should we be nervous and depressed about all of this? I don’t think so.

A year ago, I was contemplating the very same question and at the time we were worried about the General Election and the aftermath. We had five months of uncertainty and ‘sitting on hands’ prior to it, and three months after of ‘threats’ about the cull, but we somehow survived it.

The one thing we can predict with absolute certainty is that the property market is cyclical. It naturally goes up and down. It always has and always will.

But in the very tough 2010 there were some good news stories. E.On signed up to a fantastic new HQ in the centre of Nottingham and then Speedo built and moved into a new office at NG2. The Changan Motor Company and Chinook Sciences moved into Nottingham Science Park.

These were actual deals done. Sure, the deals look different from the peak of the market in 2007, but they completed. They had the confidence to look beyond this short term blip.

Perhaps what we need to do is stop looking down. Look up – maybe things aren’t as bad as you think…

May 5 2010

Nottingham – a new market?

Yesterday plans were released showing proposals for Sneinton Market – and the public are being consulted.

The Sneinton Square proposals

This is a really important piece of architecture for the city. It goes hand in hand with the redevelopment of the Victoria Baths – which were saved last year after a public outcry at their proposed demolition. Dutch architects Group A have done the design – which includes a new Dance4 studio.

This is a really important scheme for Nottingham. It sits right on the edge of the city and has the potential to connect some of the poorest neighbourhoods with the city, whilst maintaining their own identity. Some of the existing buildings are beyond repair and are at the end of their useful life. Some (including The Peggers) can and should be saved. But the open space area can be a proper market again. And double as social space.

In the last twelve months I have seen two great examples of how markets can work.

The first was in Los Angeles and is known as The Farmers Market (onto which has been built an amazing new centre – The Grove). This scheme was really well executed – and had us stay for quite some time. It was an eclectic mix of stalls, small independent shops and great food outlets – next to more modern stores…

The other is in London – Borough Market – which is often seen at the start of TV cookery programmes – where fresh food can be bought from traditional stalls.

These sorts of places have all but disappeared from out psyche in recent years with the growth of the likes of Tesco, Sainsbury and Asda. But they do have a place – and sometimes I think we have lost some of the human scale of our cities.

The regeneration of Sneinton Market may also have a knock-on effect. It might just breathe some life back into Hockley – a part of town that has suffered more than most in the recent recession.

This looks like a proposal to be supported!

Feb 10 2010

East Midlands market knowledge

This morning my firm launched our third annual ‘insight’ into the state of the market – up to the end of 2009.

Over the next three days we will get around 500 people in Nottingham, Derby and Leicester to see the results of our research – which is not based on some theory, but rather real data. It is interpreted by people who work in the market day in day out.

So, what of the market-place?

According to Experian, “Despite prospects for UK annual average growth being well below its long-term average, Derby, Leicester and Nottingham may prove to have more resilience, thanks to their diverse services sector.”

Sadia Sheikh went on to say that tourism is important for Nottingham. We do need to capitalise on Robin Hood!

And, in the introduction by Managing Director, Robert Hartley, he said, “The view is that the next 12 months will remain difficult, with only weak economic growth and the inevitable election giving people ‘food for thought’. The prediction is for owner occupier markets to be challenging. However, there are the first signs of developers and house builders renewing interest in sensibly priced opportunities in a market that saw little activity in 2009.”

I blogged this week about Nottingham City Councils move to Loxley House and our research showed that this 213,000 sq ft acquisition skewed the figures in 2009 – accounting for nearly 50% of the office floorspace taken up!

As for rents in Nottingham:

Offices – prime rents have remained consistently at just shy of £20 psf
Industrial – prime have slipped back below £6 psf and are now at 2006 levels
Retail – High Street – prime have slipped back to around £225 Zone A – from a high of over £250
Retail – out of town – fairly flat for ope A1 use at around £30 psf

For more details of the figures – and of those for Derby & Leicester you can email me at the office – tgarratt@innes-england.com . I will happily send you a copy of the research.

The final speaker was Mark Chandler from Lloyds. He had some interesting figures – they lent more in Q4 2009 than they have ever lent! There was also an interesting nugget that the LTV (loan to value) is no longer the primary test for a commercial property loan. Lloyds are looking at affordability first – the ability to service the debt has become the primary consideration.

So my overall take – there has been a shift downwards, but we have fared much better as a City than some other places. We are well placed to take advantage of the upturn – which will surely come…