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CAPITALISING ON CURRENT

MARKET CONDITIONS

Guy Gilfillan
Head of LSH Yorkshire
POSITIVE DEVELOPMENTS

RETAIL INDUSTRIAL OFFICE

Largest
£350m 5m sq ft northern office
deal 2010?
RESIDENTIAL
MARKET OPPORTUNITIES

• Retail: Convenience sector


• Healthcare: Residential / healthcare
provision for the elderly
• Education: Private schools
• Public sector: Relocation for efficiency
gains
CURRENT CONDITIONS
MARKET OPPORTUNITIES

• Sectoral changes
• Supply
• Innovation
• Environment
THE OFFICE MARKET
THE OFFICE MARKET
City Centre Office Take-up

800,000

731,419
700,000

621,405
600,000 592,639
585,844
563,785 570,208
539,113 Average take-up: 519,000 ft2
513,773
ft2

500,000 499,502
472,586 471,199

400,000

337,694

300,000
270,000
246,443

200,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
THE OFFICE MARKET

OPPORTUNITIES
Shift to core ‘CBD’:
• Across the UK
• Drivers – staff & transport
• 75% of current enquiries
• Location, location, location
THE OFFICE MARKET

OPPORTUNITIES
Demand for quality:
• Previously – cheap ‘n’ cheerful
• 2010 – quality & good value
• 80% of enquiries – Grade A/B+
THE OFFICE MARKET

OPPORTUNITIES
Lack of stock:
• No new build
• Quality of the stock
• Core CBD availability
< 2.5 yrs supply
THE OFFICE MARKET

OPPORTUNITIES
Lease events:
• 850,000 sq ft (2010 – 2015)
• 5 x 80,000 sq ft+ (2014)
• Downsizing
• Will tenants move?
THE INDUSTRIAL MARKET
THE INDUSTRIAL MARKET

OPPORTUNITIES
Recent take-up:
• 5m sq ft take-up last 2 years
• 2 years supply remaining
• Less in reality
THE INDUSTRIAL MARKET

OPPORTUNITIES
Online retailing:
• Major distribution driver
• Recently – ASOS, Amazon, Next
Directory, Asda & Ocado
• Number of major online retailer-led
requirements
THE INDUSTRIAL MARKET

OPPORTUNITIES
Manufacturing:
• Expert-led economy
• 10% of regional economy
• Rolls-Royce & Forgemasters

Innovation:
• Universities
• Waste to energy
• Energy
THE INVESTMENT MARKET
OPPORTUNITIES
• First transaction yield
increase for 18 months
• Transaction levels slow in
Q3 – still highest for 2
years
• Focused on Central
London Office Market / 2001 2002

prime assets
• Secondary / tertiary
markets soft
THE INVESTMENT MARKET
OPPORTUNITIES
• Institutions are the
most active buyers
• Overseas investment
pattern less
predictable
OPPORTUNITIES QUASHED

• Lack of finance
• Shortage of available sites & premises
• Lack of economic growth
CONCLUSION

Most high-profile property


entrepreneurs created the opportunity
in a bad market & capitalised on it
later in the cycle.

When the market turns, it will improve


much more quickly than
commentators expect.