2012 Global Market report - NAI Global

Leeds, England, United Kingdom
London, England, United Kingdom
Contact
NAI Haywards
+44 20 7101 0200
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
94,058
1.0%
$2,173.00
$34,800.00
5.0%
8.3%
0.5%
62.262
Leeds is the largest financial service center outside London
based on the number of staff employed. The economy has
shifted away from manufacturing with an even split between
the public sector, finance and leisure employment. In 2011,
it was announced that four sites totaling c.350 acres in
Leeds will become enterprise zones, with the aim of creating
new jobs and investment in the region.
Office leasing activity is slightly up from 2010 although
headline rents have remained steady. Take up has been
supported by three large transactions; Asda (The Mint,
38,039 SF), Redmayne Bentley (9 Bond Court, 13,930 SF)
and Clarion Solicitors (Elizabeth House, 15,000 SF). There
are two large pre-let requirements in the office market;
Walker Morris (100,000 SF) and KPMG (60,000 SF). Availability
is expected to increase as public sector occupiers
seek to consolidate their space needs. This will release
largely secondary stock onto the market. It is unlikely that
this will affect demand for Class A space and the rents paid.
Supply of industrial stock over 100,000 SF in the region has
reduced significantly over the last 12 months, underpinned
by a few large transactions; Debenhams (Sherburn,
660,000 SF) and online retailer ASOS (Barnsley, 550,000
SF). While the headline numbers look healthy, the market is
still heavily biased towards the occupier as each of the
completed deals have significant incentive packages
attached. The supply of good quality stock is now limited,
forcing occupiers to either compromise on specification or
look at “design and build” solutions as little speculative
development is anticipated. Prime investment yields are
c.7.25%.
Department stores within Leeds include Debenhams, House
of Fraser and Harvey Nichols. Leeds is described as the
‘Knightsbridge of the North’ and is consistently ranked as
one of the UK’s top five retail destinations. The £350 million
Trinity Walk project will see the redevelopment of over 1
million SF of prime retail and leisure space in the city center,
scheduled for completion in Spring 2013. The retail-led
project will create 4,000 retail and leisure jobs and will
transform a site north east of Leeds city center, most of
which has been empty for the past four decades. The plans
are scaled down from proposals which stalled two years ago
due to the economic downturn.
Contact
NAI Haywards
+44 20 7101 0200
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
94,058
1.0%
$2,173.00
$34,800.00
5.0%
8.3%
0.5%
62.262
The position of London as a major financial, tourist and
transport hub has resulted in its economy remaining fairly
buoyant during the recession. This is in contrast to the
remainder of the UK. In addition there have been significant
capital investment projects upgrading London’s infrastructure
(e.g. Crossrail, Olympic Park projects). The Olympics Games
in 2012 will give a further boost to the regional economy.
The Central London office market consists of the West
End, City and Docklands. The supply of Class A office
accommodation continues to fall, although take up is above
its long term average. In the West End, limited supply
has resulted in rents increasing and incentive packages
shrinking; this trend is set to continue over the next year.
Key lettings include Debenhams (Regents Place 150,000
SF). The City has also seen improved take up, but developers
are delaying projects due to the economic uncertainty. This
will mean that two to three years out, the choice of Class A
space will be restricted.
The investment market has remained buoyant with 11-12
St James’s Square (£147 million, 5.45%) being a
benchmark sale. Overseas investors account for 55% of
transactions by value. Significantly the City has seen a
synchronized sell off as over £5 billion of property is
currently on the market; effectively one year’s transaction
value on the market at one time.
The proximity of Heathrow Airport continues to have a
positive impact on warehouse rents, which are rising faster
than the national average. This is being driven by third party
logistics providers and retail distribution. Although vacancy
rates have remained unchanged for two years at just under
9%, there are signs of a shortage of Class A space. As a
consequence, we expect to see more “design and build”
speculative development in and around Heathrow over the
next 12 months. The largest reported deal was DB
Schenker’s new UK HQ and warehouse facility (The Portal,
Heathrow 106,500 SF) based on a headline rent of
£14.00/SF, the largest pre-let at Heathrow for five years.
Demand from the luxury retail market is growing with
effectively no vacancies in the prime West End streets (e.g.
Bond Street). In September, Westfield’s Stratford City
opened. Close to the Olympic Park in East London, the
center provides 1.8 million SF of retail space as part of 13.5
million SF mixed use project.
Leeds At A Glance
conversion 0.62 GbP = 1 us$ RENT/M 2 /MO US$ RENT/SF/YR
low High low High Vacancy
cItY center offIce
New Construction
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
N/A
GBP 24.00
N/A
N/A
N/A
N/A
GBP
N/A
25.00
N/A
N/A
N/A
N/A
N/A
$ 38.71
N/A
N/A
N/A
N/A
N/A
$ 40.32
N/A
N/A
N/A
N/A
N/A
10.00%
N/A
N/A
N/A
N/A
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
GBP
GBP
2.00
2.00
N/A
GBP
GBP
4.25
4.25
N/A
$
$
3.23
3.23
N/A
$
$
6.85
6.85
N/A
15.00%
15.00%
N/A
City Center
Neighborhood Service Centers
Community Power Center (Big Box)
Regional Shopping Centers/Malls
Solus Food Stores
N/A
N/A
N/A
N/A
N/A
GBP 260.00
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$ 419.35
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
deVeloPment land low/acre High/acre low/acre High/acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
London At A Glance
conversion 0.62 GbP = 1 us$ RENT/SF/YR RENT/SF/YR
low High low High Vacancy
offIce West end
Mayfair
GBP 90.00 GBP 105.00 $ 145.16 $ 169.35 5.90%
Victoria
GBP 55.00 GBP 63.00 $ 88.71 $ 101.61 N/A
Midtown
offIce cItY
GBP 42.50 GBP 50.00 $ 68.55 $ 80.65 N/A
Core
Fringe
Docklands
IndustrIal sPace
Greater London
West London
retaIl sPace (Zone a)
GBP
GBP
GBP
GBP
GBP
45.00
30.00
30.00
5.00
8.75
GBP
GBP
GBP
GBP
GBP
55.00
35.00
36.00
11.50
13.50
$
$
$
$
$
72.58
48.39
48.39
8.06
14.11
$
$
$
$
$
88.71
56.45
58.06
18.55
21.77
7.70%
N/A
6.90%
10.00%
9.00%
Oxford Street (Zone A)
GBP 300.00 GBP 750.00 $ 483.87 $ 1,209.68 N/A
Bond Street (Zone A)
Sloane Street (Zone A)
City (Zone A)
GBP 250.00
N/A
N/A
GBP 1,000.00
N/A
N/A
$ 403.23
N/A
N/A
$ 1,612.90
N/A
N/A
N/A
N/A
N/A
deVeloPment land low/acre High/acre low/acre High/acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
2010 Global Market Report n www.naiglobal.com 64