Economy The first measure of the UK economy following the EU referendum has delivered positive results. UK GDP growth in Q3 was 0.5%, coming in ahead of expectations and exceeding the 0.3% figure for the Eurozone. As a result, the IMF upgraded its UK GDP forecast for 2016 to 1.8% - the strongest rate of growth the IMF is predicting for a G7 nation. Occupier markets Take-up across the ten regional cities monitored in ROMP amounted to 1.2m sq ft in Q3 2016, 18% less than in the second quarter of 2016. Nonetheless, total take-up for 2016 has now reached 4.1m sq ft, on par with the 10-year average for the Q1-Q3 period. The highest take-up of Q3 was in Manchester. Total take-up for the quarter was 263,000 sq ft, 5% above the 10-year quarterly average. The 81,000 sq ft letting to law firm Freshfields at One New Bailey was the largest transaction of the quarter. Notably, this is one of only two lettings complete above 30,000 sq ft in the city during 2016. This compares to ten in 2015. The second largest transaction of Q3 was in Cardiff where car finance firm Motonovo took 71,000 sq ft at One Central Square. The building forms part of the regeneration scheme immediately in front of Cardiff REGIONAL OFFICES OCCUPIER & INVESTMENT MARKET SUMMARY Q3 2016 RESEARCH Source: Knight Frank Research 5-YEAR QUARTERLY AVERAGE Q3 2016 Newcastle Sheffield Edinburgh Birmingham Aberdeen Glasgow Leeds Bristol Cardiff Manchester 000s sq ft 0 100 200 400 500 300 600 FIGURE 1 Q3 2016 take-up vs 5-year quarterly average Source: Knight Frank Research 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Bristol Manchester Edinburgh Leeds Sheffield Glasgow Aberdeen Birmingham Cardiff Newcastle GRADE A SUPPLY 5-YEAR AVERAGE FIGURE 2 Grade A supply (sq ft) Q3 2016 End 2016 F Aberdeen £32.00 £30.00 Birmingham £32.50 £33.00 Bristol £28.50 £30.00 Cardiff £25.00 £25.00 Edinburgh £33.50 £34.00 Glasgow £30.00 £31.00 Leeds £26.50 £27.00 Manchester £34.00 £34.00 Newcastle £23.00 £23.00 Sheffield £23.00 £23.00 FIGURE 3 Prime rents and forecast (per sq ft) Source: Knight Frank Research One Central Square, Cardiff Central Train Station. Total take-up in Cardiff for 2016 has now reached 478,500 sq ft, 37% above the 10-year average for the period. Notably, Cardiff is one of only three regional cities where take-up is ahead of the equivalent measure for 2015. On the supply side, overall Grade A availability fell by a further 3% in Q3 to reach 2.1m sq ft. This total is 20% below the 5-year average of 2.6m sq ft. The lowest Grade A availability was in Bristol with only 75,000 sq ft being marketed at Q3. This is the lowest level of Grade A availability on record for the city. The highest level of availability at Q3 was in Aberdeen. A total of 621,000 sq ft was on the market at the end of Q3, a level three times higher than the average for the city. Total of space under construction in the regions in Q3 stood at 4.3m sq ft of which, 2.8m sq ft is speculative build. Manchester had the highest amount of office development underway with 1.1m sq ft registered as under construction. During Q3, four of the ten regional cities recorded an increase in prime rents. Both Birmingham and Newcastle increased by £1 per sq ft to reach £32.50 and £23.00 per sq ft respectively. Similarly, prime rents in Edinburgh and Glasgow moved up to £33.50 and £30.00 per sq ft. Notably, six of the ten regional markets have registered a rental increase in 2016.
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
EconomyThe first measure of the UK economy following the EU referendum has delivered positive results. UK GDP growth in Q3 was 0.5%, coming in ahead of expectations and exceeding the 0.3% figure for the Eurozone. As a result, the IMF upgraded its UK GDP forecast for 2016 to 1.8% - the strongest rate of growth the IMF is predicting for a G7 nation.
Occupier marketsTake-up across the ten regional cities monitored in ROMP amounted to 1.2m sq ft in Q3 2016, 18% less than in the second quarter of 2016. Nonetheless, total take-up for 2016 has now reached 4.1m sq ft, on par with the 10-year average for the Q1-Q3 period.
The highest take-up of Q3 was in Manchester. Total take-up for the quarter was 263,000 sq ft, 5% above the 10-year quarterly average. The 81,000 sq ft letting to law firm Freshfields at One New Bailey was the largest transaction of the quarter. Notably, this is one of only two lettings complete above 30,000 sq ft in the city during 2016. This compares to ten in 2015.
The second largest transaction of Q3 was in Cardiff where car finance firm Motonovo took 71,000 sq ft at One Central Square. The building forms part of the regeneration scheme immediately in front of Cardiff
REGIONAL OFFICESOCCUPIER & INVESTMENT MARKET SUMMARY Q3 2016
RESEARCH
Source: Knight Frank Research
5-YEAR QUARTERLY AVERAGE
Q3 2016
Newcastle
Sheffield
Edinburgh
Birmingham
Aberdeen
Glasgow
Leeds
Bristol
Cardiff
Manchester
000s sq ft0 100 200 400 500300 600
FIGURE 1
Q3 2016 take-up vs 5-year quarterly average
Source: Knight Frank Research
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Bris
tol
Man
ches
ter
Ed
inb
urgh
Leed
s
She
ffiel
d
Gla
sgow
Ab
erd
een
Birm
ingh
am
Car
diff
New
cast
leGRADE A SUPPLY5-YEAR AVERAGE
FIGURE 2
Grade A supply (sq ft)
Q3 2016 End 2016 F
Aberdeen £32.00 £30.00
Birmingham £32.50 £33.00
Bristol £28.50 £30.00
Cardiff £25.00 £25.00
Edinburgh £33.50 £34.00
Glasgow £30.00 £31.00
Leeds £26.50 £27.00
Manchester £34.00 £34.00
Newcastle £23.00 £23.00
Sheffield £23.00 £23.00
FIGURE 3
Prime rents and forecast (per sq ft)
Source: Knight Frank ResearchOne Central Square, Cardiff
Central Train Station. Total take-up in Cardiff for 2016 has now reached 478,500 sq ft, 37% above the 10-year average for the period.
Notably, Cardiff is one of only three regional cities where take-up is ahead of the equivalent measure for 2015.
On the supply side, overall Grade A availability fell by a further 3% in Q3 to reach 2.1m sq ft. This total is 20% below the 5-year average of 2.6m sq ft. The lowest Grade A availability was in Bristol with only 75,000 sq ft being marketed at Q3. This is the lowest level of Grade A availability on record for the city. The highest level of availability at Q3 was in Aberdeen. A total of 621,000 sq ft was on the market at the end of Q3, a level three times higher than the average for the city.
Total of space under construction in the regions in Q3 stood at 4.3m sq ft of which, 2.8m sq ft is speculative build. Manchester had the highest amount of office development underway with 1.1m sq ft registered as under construction.
During Q3, four of the ten regional cities recorded an increase in prime rents. Both Birmingham and Newcastle increased by £1 per sq ft to reach £32.50 and £23.00 per sq ft respectively. Similarly, prime rents in Edinburgh and Glasgow moved up to £33.50 and £30.00 per sq ft. Notably, six of the ten regional markets have registered a rental increase in 2016.
© Knight Frank LLP 2016 - Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
REGIONAL OFFICESOCCUPIER & INVESTMENT MARKET SUMMARY Q3 2016
COMMERCIAL RESEARCH Darren Mansfield, Associate, Commercial Research +44 20 7861 1246 [email protected]
CAPITAL MARKETS Henrie Westlake, Partner +44 113 297 2413 [email protected]
LEASING & DEVELOPMENT David Porter, Partner +44 161 833 7725 [email protected]
www.KnightFrank.com
Investment activityOffice investment volumes recorded across the ten major regional cities increased by 48% in Q3 with total sales reaching £476m. This meant that regional office sales for 2016 increased to £2.1bn, 31% above the 10-year average for a Q1 to Q3 period.
With two transactions over £50m completing in Q3, the total above this threshold for 2016 reached nine. This compares to eleven recorded at the same point in 2015. Notably, overseas money accounts for the majority of the larger purchasers in 2016. Foreign buyers account for 48% of total regional office investment and seven of nine acquisitions above £50m.
The largest investment deal of Q3 was the £164m acquisition of 1 St Peters Square in Manchester by DEKA Immobilien. This represents the second major regional purchase of 2016 for the German investor following the £105m purchase of Atria in Edinburgh in Q1. At the Q3 mark, Manchester accounts for the highest amount of office investment across the ten major regional cities, 26%.
The £63m sale of Waverley Place, Edinburgh to TRIUVA was the second largest deal of Q3. This meant that office investment increased to £402m for 2016, already above the full-year 2015 total. Notably, the German investor has completed three purchases in Edinburgh during 2016 representing 36% of total office investment in the city.
Pricing held firm in the majority across the regional cities during Q3 2016. The exception was in Birmingham where prime yields moved out by 25bps from 5.00% to 5.25%. In particular, the lower value of sterling since the EU Referendum has support demand. This has meant that where prime opportunities have come to market, bidding has been aggressive. Furthermore, low bond yields continue to encourage investors toward commercial property in order to generate income.
Date Street Purchaser Vendor Price £m Yield %
Q3 2016 St Peters Square, 1. Manchester
DEKA Immobilien
Argent Developments
164.00 5.25
Q3 2016 Waterloo Place, 2-4. Edinburgh
TRIUVA M&G Real Estate
63.00 5.69
Q3 2016 Sovereign Square, 3. Leeds
Leeds City Council
Bruntwood Estates Ltd
43.75 Undisclosed
Q3 2016 Velocity Village. Sheffield
Europa Capital Partners
Lone Star 37.50 Undisclosed
Q3 2016 J2 Riverside Exchange. Sheffied
Trinova Real Estate Spain
Bartuc Ltd 30.95 6.78
Major regional office investment deals in Q3 2016
Source: Knight Frank Research
FIGURE 4
Regional office investment volumes (£bn)
0
1
2
3
4
5
6
7
Q3 Q4
Q1 Q220
14
2016
2015
2013
2012
2011
2010
2009
2008
2007
2006
Source: Property Data
2015 Q3 2016
Yield sentiment
Aberdeen 6.25 6.50
Birmingham 5.00 5.25
Bristol 5.00 5.50
Cardiff 5.75 5.75
Edinburgh 5.50 5.25
Glasgow 5.50 5.50
Leeds 5.25 5.25Manchester 5.00 5.00Newcastle 6.00 6.00Sheffield 6.50 6.50
FIGURE 5
Prime yields (%) Reflects 10 year income
Source: Knight Frank Research
4
4
4
4
4
44
4
4
44
4
4
4
Please refer to our bi-annual reports for more detailed accounts of the city markets http://www.knightfrank.co.uk/research/ROMP/
44
4
One St Peters Square, Manchester
Related Documents
