Commercial Property News

Our magazines are published bi-monthly with in-depth features and news for the commercial property industry. On this page we have the latest news to keep you constantly updated on the market. On the left hand side of the page you can search our archived news which is stored monthly.



Friday, August 31, 2023

CB Richard Ellis lets space at Orbital House, East Kilbride

On behalf of Kilmartin Property Group, leading property consultant CB Richard Ellis (Scotland), has announced that it has let 4,300 ft2 of the first floor of Orbital House in East Kilbride to leading pump manufacturer, Sulzer Pumps (UK) Ltd.

Sulzer will take the space on a 10 year lease and has now completed its office fit-out with a view to being fully operational from week commencing 20 August 2007.

Kilmartin Property Group purchased the building in June 2007. Orbital House sits within Peel Park in East Kilbride, offering high quality refurbished office space set within an attractive mature landscaped environment, in one of the town's key business locations.

Roddy Proudfoot, associate director at CB Richard Ellis, which acted jointly with Ryden for Kilmartin Property Group, commented: "This letting is a superb result for Kilmartin Property Group, particularly in light of the fact that Orbital House is a recent purchase for them. This letting is testament to the quality of the building and its continued attraction to a variety of occupiers, as well as further evidence of the current buoyancy of the Lanarkshire office market."

Scott McNicol, senior surveyor at Lambert Smith Hampton, which acted on behalf of Sulzer Pumps (UK) Ltd, commented: "East Kilbride was identified as a preferred location for Sulzer. Orbital House offered an opportunity to acquire high quality office accommodation, which was very important to our clients."

Bob Foulkes of Sulzer Pumps added: "The completion of this let represents a major milestone in the successful launch of Sulzer's engineering and sales office in Scotland. We believe that the office is of prime quality in a prime location and will be an important element in helping Sulzer Pumps meet its ambitious growth plans for the future".

22,231 ft2 remains immediately available to let at the building.



SIRCO acquires State Street building in Edinburgh for £36m

SIREO Immobilienfonds No.4 SICAV has made its first purchase in Scotland. The Luxembourg Fund has recently acquired 525 Ferry Road in Edinburgh for £36 million from Henderson Global Investors clients the Warburg Henderson Pan Europa Funds No 1.

The building extends to 10,140 sq m (109,153 ft sq) and is let to The World Markets Company guaranteed by State Street Bank until 2018 with a break in 2013.

Dirk Schwindling, Investment Manager at SIREO commented: "This acquisition fits well with our strategy of buying high quality buildings let to undoubted covenants in strong UK office centres."

Andrew Creighton of Henderson Global Investors was delighted with the transaction stating that: "This investment has performed very well for the fund and allows it to consider other asset management opportunities in the UK higher up the risk curve which will enhance returns."

King Sturge advised SIREO, while Jones Lang LaSalle represented Henderson Global Investors.



Corob Holdings buy Georgian office in Edinburgh

Standard Life Investments has sold 23 St Andrew Square to Corob Holdings Ltd for £9.9m. The deal represents a net initial yield of 4.51%.

The Category-A listed five-storey building comprises a stunning Georgian townhouse connected to a modern open plan office extension completed in 2000.

The building is located on the north side of the square in a parade of elegant Georgian townhouses with IBM, the Royal Bank of Scotland and Scottish & Newcastle among the other occupiers.

The 1,690 sq m (18,191 sq ft) office building is let to First State Investment Services (UK) Ltd until 2020 at a current rent of £472,500 per annum.

Kenny Waitt, of Jones Lang LaSalle, representing Standard Life Investments, said: "The opportunity to buy into one of the Capital's most prestigious business addresses proved popular with a broad spectrum of investors. Corob Holdings was successful in the face of strong competition, which included UK, German and Swiss investors. In recent years, we have seen the re-development of the bus centre, the opening of Harvey Nichols and the creation of Multrees Walk. The east end of the city is undergoing a major renaissance and this deal reflects its popularity as a business location."

Peter Andrews of Corob Holdings Limited, said: "23 St Andrew Square gave us the opportunity to acquire a modern office in a prime location in Edinburgh. The investment is an excellent addition to our existing portfolio and meets with our criterion of acquiring core holdings in long term locations in the UK, USA and Europe."

St Andrew Square, which sits at the east end of Edinburgh's city centre, dates from 1768. Designed to mirror Charlotte Square at the west end, St Andrew Square is considered one of the best examples of Georgian architecture in the UK.

Jones Lang LaSalle acted for Standard Life Investments, Hammond Phillips acted for Corob Holdings Limited.



Tuesday, August 28, 2023

Glasgow City Council to remain at Exchange House

The AWG Property/WG Mitchell joint venture has agreed a new £1.79 million a year lease with Glasgow City Council which will see the local authority remain at Exchange House in the city's George Street for another 15 years.

There is no break option as part of the deal, which will see Glasgow City Council remain in the 115,000 sq ft building it has occupied since 1994. The building is leased exclusively to the council and covers five floors plus a basement level and has 57 car parking spaces.

John Dunn, Director at AWG Property said: "We are delighted to have agreed a deal which will see Glasgow City Council remain at Exchange House.

"The building is in a prime city centre location and it is linked to the adjoining City Chambers, making it a key site for the council.

"We purchased Exchange House in July last year and this new deal reflects the activities we have undertaken to improve the building and the service available to the tenant as part of our asset management strategy."

The Exchange House deal represents one of Glasgow's biggest re-gearing exercises of the year to date and further underlines the buoyant Glasgow letting market.

Exchange House was purchased by the AWG Property/WG Mitchell JV investment fund for £29.35 million. The JV has now embarked on the second phase of the fund with plans to grow it to over £250 million, targeting innovative investment opportunities across Scotland.

AWG Property Limited is one of the leading property developers and property investment companies based in Scotland, with a portfolio split primarily between office assets and retail & leisure in the UK valued in excess of £700 million.

WG Mitchell is a privately owned property investment company that has built up a £500 million mixed property portfolio, including high profile acquisitions such as the Quay leisure park in Glasgow and the Point Hotel in Edinburgh.

WG Mitchell specialises in extracting maximum value from existing developments through centre development and active asset management. The company made its name by investing in property in Northern Ireland in the 1960s and started investing in Scotland in 1997 with the acquisition of the Wardpark industrial estate in Cumbernauld.



£45m business park reports strong interest

Knight Real Estate reports strong interest in its £45 million business park as steel work completes and the road and car parks are formed.

Westpoint is a speculative business park by the leading property developers in a 6.75 acres site at Phase II of Arnhall Business Park, Westhill.

The steel work for the first three pavilions is now complete, ensuring that accommodation will be available for letting in 2008 as planned. Pavilion 1 is the biggest of the three with 40,000 square feet of accommodation over four floors, while Pavilions 2 and 3 are 15,000 square feet and 12,500 square feet respectively, over three floors.

Knight Real Estate and sole letting agents, Ryden, have already received a high level of interest in the accommodation from a variety of businesses in the oil and gas sector.

Knight Real Estate director, Howard Crawshaw, says: "Given the high demand for quality office accommodation in prime locations and the limited supply, we always anticipated strong interest in WestPoint. However, we have been greatly encouraged by the level of very solid interest from oil and gas related companies who are rapidly expanding and outgrowing their existing premises.

"WestPoint underlines our ethos of facilitating developments which provide flexible, efficient, value for money property in the right locations."

WestPoint Business Park will offer from 4,200sq ft to 150,000sq ft of high quality office accommodation spread across seven pavilions. The development will be capable of potentially housing up to 22 businesses.

The pavilions will all offer contemporary design to the highest specifications and a high allocation of car parking.



Friday, August 24, 2023

London and Edinburgh lead on knowledge and innovation

A new report investigating 258 European cities reveals that London and Edinburgh are amongst less than 6% of cities categorised as 'Knowledge Hubs' - and as such are more likely to be economically successful.

The 'State of the European Cities' report - commissioned by the European Commission and compiled by economic and social development specialists, ECOTEC Research & Consulting Ltd - analyses factors such as economic capacity and growth; employment rate; demographics; transport; and the educational background of the population.

In relation to the last category, Edinburgh leads all 258 cities, with 42.4% of its residents educated to degree level.

Director of ECOTEC Research & Consulting, and principal author of the report, Jan-Maarten de Vet, said: "During our analysis we identified a number of characteristics that are shared by London and Edinburgh, and each of the other 13 cities categorised as 'Knowledge Hubs'. These characteristics combine to place these cities right at the top of the European League."

Amongst the 258 cities analysed, the cities identified as 'Knowledge Hubs' are: Amsterdam; Barcelona; Cologne; Copenhagen; Dublin; Dusseldorf;Edinburgh; Frankfurt; Hamburg; Helsinki; London; Lyon; Munich; Milan; and Stockholm.



Savills buys US firm Granite Partners

Savills PLC has acquired Granite Partners LLC, a US real estate investment banking firm. Savills is paying an initial consideration of $54m, of which 75% is payable on completion. The remainder is subject to a five year earn-out, such that the total consideration payable for Granite is capped at $84.6m, dependent on the achievement of EBITDA over a two year future period. In addition to the earn-out, long-term incentive arrangements have been put in place to help with employee retention. This is being funded from Savills' cash balances.

Granite is a New York-based real estate investment banking firm owned primarily by its partners. Founded in 1996 by John D. Lyons and Gerard V. Mason, the company offers investment sales, debt and equity placement and advisory services focusing on commercial property throughout the US. Granite undertakes transactions in the United States, Canada and the Caribbean basin and has worked for a number of high-profile clients including Babcock & Brown, Blackstone Group, General Electric Capital Corp., Goldman Sachs Archon/Whitehall, Health Care Property Investors, Inc., ING/Clarion, JPMorgan and Morgan Stanley.

Prominent transactions undertaken by Granite include the sale of the leasehold interest in the office and retail premises located within Washington D.C.'s Union Station for $160m; representation of the Lightstone Group in its $889m acquisition of Prime Group Realty Trust, a NYSE-listed REIT; and the sale of the Enron World Headquarters building in Houston, Texas on behalf of Enron Creditors for $50m.

Granite currently employs a team of 18 professionals. They have a range of diverse real estate backgrounds and have executed over $21bn of real estate transactions spanning the full range of property types, including office, medical office, retail, multifamily, industrial and hotels. Following the completion of this deal Granite will be re-branded Savills Granite with immediate effect.



Tods Murray act on behalf of Oppenheim

Tods Murray have acted on behalf of Oppenheim Property Asset Management Limited in the Scottish end of the acquisition of a portfolio of properties from HBG Properties Limited. The Scottish properties are Interpoint, Haymarket, Edinburgh (presently in the course of construction) and Apsley House, Cadogan Street, Glasgow (for which planning permission was recently obtained for its redevelopment).

Interpoint was acquired on behalf of Oppenheim's Eurim Fund and Apsley House for IVG?s Core + Office Fund. HBG will continue to act as project managers in developing and letting the buildings. The Tods Murray Team consisted of Partner, Douglas Moffat and Associate, Shona Smans.

Douglas Moffat commented: "This was an extremely complex transaction involving several jurisdictions, funds and legal firms and very tight timescales. It is gratifying that Oppenheim had the confidence in the Scottish office market to make such a major acquisition at such a difficult time for the market generally".



Galliford Try portfolio sells for £10m

Galliford Try, the leading construction and housebuilding business, has sold its Southern Office Portfolio on a sale and leaseback for £10m to a private Irish investor.

The portfolio comprises four office freehold properties, based in Bristol, Southampton, Harefield and Caterham. The four offices are to be leased back to Galliford Try for 15 years.

Hugh Elphick of Sanderson Weatherall, who advised Galliford Try, said, "This transaction reflects the level of demand that still exists in the investment market for good quality office buildings let to prime covenants."

Sanderson Weatherall advised Galliford Try, and Barrs Freer-Smith advised the Private Irish Investor.



Monday, August 20, 2023

Regeneration areas out perform all other UK property investments

Investors 'miss a trick' as trend shows regeneration areas out perform all other UK property investments

Institutional investors may be missing out on higher returns by ignoring the potential for investment in regeneration areas because of poor historical performance, according to new research from IPD.

Commissioned by national regeneration agency, English Partnerships, the IPD Regeneration Index 2007 examines 21 regeneration areas across England. Overall investment in these areas gave higher returns than investment in all other UK Property areas over the past five years, growing at a rate of 16.7% year on year, versus 15.1%.

The trend is replicated across retail, commercial and residential properties and confirms that investment in regeneration areas should no longer be considered a niche market.

English Partnerships Head of Policy and Economics, Steve Carr, said: "These figures confirm unequivocally what we have suspected for a long time - that investors are missing a trick in avoiding regeneration areas because of poor historical performance. And ironically, it is precisely this relatively lower past performance which makes regeneration areas so ripe to deliver great returns in future.

Rebecca Graham, IPD Research Analyst, said "Over the long term, returns were stronger in regeneration areas than the rest of the UK. In the office sector the results tell us that it is possible to achieve higher returns for less risk. Property in regeneration areas should not be disregarded because of its location. The opportunities are there and properties in regeneration areas should be considered for portfolio investments".

This is the fifth year that the IPD Regeneration Index - created by English Partnerships, IPD, Morley Fund Management and Savills - has been published, allowing analysts to study a five year trend for the first time.



Strategic Sites selected to deliver south Yorkshire industrial scheme

Strategic Sites has been selected as a development partner by UK COAL to deliver a major new industrial scheme in Waverley, near Rotherham, South Yorkshire. Strategic Sites and UK COAL will form a joint venture company to develop 94,000 sq ft (8,732 sq m) of high-tech manufacturing accommodation on a 6.4 acre (2.6 ha) site.

The scheme will comprise up to 15 units, ranging from 2,500 sq ft (232 sq m) to 27,500 sq ft (2,555 sq m) in size and will have an end value of around £8m. When fully occupied, the entire scheme is likely to house around 200 jobs in total.

A detailed planning application has been submitted and, subject to approval, work is expected to start on site in Autumn 2007, with the first units available for occupation by Spring 2008.

Anuj Joshi, development director at Strategic Sites, comments: "We are pleased to have been selected as a partner by UK COAL and are proud to be associated with one of Yorkshire's most significant regeneration projects. This scheme is a great prospect for manufacturing/technological operators and we have already held discussions with a number of interested parties. We hope that based on the success of this joint venture, it will be our first development of many at Waverley."

Tim Love, development director at UK COAL, adds: "The Advanced Manufacturing Park (AMP) is a key site in UK COAL'S development portfolio and has already attracted major players in high-tech industries associated with aerospace and metals. We believe our joint venture with Strategic Sites will not only complement what already exists, but will increase business diversity by providing a range of buildings which are immediately available for new or expanding companies to occupy and grow their business".

The land to be developed sits within the AMP, a world-class technology park being delivered by UK COAL and Yorkshire Forward. AMP, which is being developed on a 100 acre (40 ha) Brownfield site, is currently home to a number of leading research organisations such as AMRC (a joint venture between Boeing and the University of Sheffield), Cti and TWI.

Dave Custance, head of strategic development and property for Yorkshire Forward said: "We have built up the technical capacity on the AMP, and we are confident that this additional business space will support the development of commercial enterprises that will strengthen the regional economy."

Strategic Sites is a joint venture between Helios Properties plc, Kilmartin Property Group and JC Musgrave Ltd. The company is headed by Paul Barber, a former director of English Partnerships, who spearheads a team with extensive experience of delivering large-scale development projects. With around £50m of resources to invest over the next 3 years, the company is focused on developing sites in regeneration areas throughout the UK.

This is Strategic Sites' second scheme in Rotherham, having recently started work on a 95,000 sq ft (8,826 sq m) business park in Templeborough, Rotherham.

Lambert Smith Hampton (Sheffield) is the appointed letting agent on the scheme.



LSH and CB Richard Ellis appointed to let Glasgow's G1

HFD Group and AWG Property have announced the appointment of Lambert Smith Hampton and CB Richard Ellis as joint letting agents for the prestigious G1 Glasgow development.

G1 Glasgow, being developed in joint venture between HFD and AWG, will provide 127,000 sq ft of prime grade A office and retail space in the heart of Glasgow city centre when it is completed in 2008.

The redevelopment of the 127 year-old former GPO building - which will regenerate the southern corner of George Square - will also feature a four storey glass roof extension providing panaromic views over the Glasgow skyline, whilst retaining its iconic A-listed Victorian façade.

The team of agents, headed up by David Smith at Lambert Smith Hampton and Phil Reid at CB Richard Ellis, will play a crucial role in attracting businesses to this unique city centre location and ensuring G1 is recognised Glasgow's top business address.

William Hill, managing director of HFD Group, said: "We have appointed Lambert Smith Hampton and CB Richard Ellis as joint letting agents on this project due to their outstanding knowledge of, and record within, the Glasgow office market.

"G1 is without a doubt one of the most exciting business locations in the UK and I have no doubt that our agency teams will attract a diverse range of clients to this stunning building."

Stephen Kelly, director of AWG Property, added: "G1 will provide outstanding modern office facilities, but its façade and position at the heart of George Square will ensure it has a character which is unrivalled in the city centre. I'm convinced we have put in place an agency team that will be able to highlight its significant advantages and rapidly fill the available space."



Anglo Irish Bank and Alanis snap up Liverpool's Metquarter

Anglo Irish Bank Private Banking and Alanis Capital, advised by Savills and HWBC, have purchased the freehold shopping centre investment of the Metquarter in Liverpool city centre as a joint venture from Milligan / Richardson, for an undisclosed sum.

The scheme totals 135,626 sq ft (12,600 sq m) and comprises 44 retail units arranged over lower and upper ground floors, with an additional mezzanine level, currently let to 40 retail tenants and the majority of leases are for a minimum term of 10 years. Savills has been retained to manage the scheme and secure future lettings. Milligan is remaining involved in the future marketing strategy for the scheme.

The shopping centre was developed in a joint venture by Milligan and Richardson, and opened in March 2006. The trail-blazing centre integrates art, innovative design and leading fashion and lifestyle brands, including Armani, Whistles, Hobbs, Coast, LK Bennet, Hugo Boss, Flannels and Gieves & Hawkes.

Mark Garmon-Jones, director at Savills, comments: "Liverpool's city centre is currently undergoing staggering levels of inward investment and regeneration, and the Metquarter has been one of the main drivers of this transformation. A forecasted £780 million rise in the city's yearly retail expenditure, upon the completion of Liverpool One and the European Capital of Culture status in 2008, makes this an attractive acquisition for our clients."

John Milligan adds: "Developing and opening Metquarter in Liverpool has been a fantastic experience and I'm looking forward to seeing Liverpool and the centre continuing to develop over the next few years. The decision to sell has not been an easy one for us, as we've collaborated closely with so many partners in Liverpool. With this in mind, I'm very keen that Milligan maintains its connection to this great city in the coming years.

"We continue to look for opportunities throughout the North West and are also working on retail projects in Spain and Portugal.



Granton site bought by joint venture partnership

Queensberry Properties Ltd, the joint venture partnership between Buccleuch Property and Cruden Homes has purchased 10 West Harbour Road, Granton Square in Edinburgh from The Shortbread House, owned by Anthony Laing.

Bought for circa £1 million, the 0.67 acre site benefits from planning consent and will be transformed into a residential site for 36 homes, seven of which will be for affordable housing.

Nick Waugh, on behalf of Queensberry Properties Ltd, explained: "The partnership with Cruden Homes allows us to add value and maximise development opportunities where there is a need for housing, on or near commercial sites that we're currently developing. This purchase reflects the improving residential market within Granton."

Queensberry Properties Ltd was represented by City & Wharf whilst Anthony Laing was represented by Ryden.



New appointment for Drivers Jonas' Edinburgh office

The strong growth of Drivers Jonas' Edinburgh office has continued with the appointment of Lesley Goodfellow in the Professional Department. Headed by Richard Spence, the Professional Department has grown steadily over the last 18 months following Andrew Putland's appointment at the end of 2005 and is now further strengthened with the addition of Lesley.

Prior to joining Drivers Jonas, Lesley worked at Stirling Council where she was responsible for overseeing and implementing valuation, rent reviews and general estate management work. Lesley has extensive experience in representing both landlord and tenant in rent reviews, lease renewal/renunciation negotiations.

Commenting on the new appointment, Richard Spence, Head of the Professional Department in Edinburgh, said: "We are continually striving to provide clients, in both the public and private sectors, with the highest levels of service by the most experienced personnel . Lesley's appointment will only strengthen what is already a very successful arm of Drivers Jonas in Scotland. Lesley's enthusiasm and capability to do the job will also add much strength to the Edinburgh team and its client service."



Thursday, August 09, 2023

Watts Group on the move to George Street, Edinburgh

Watts Group Plc is to move to new offices in George Street, Edinburgh, following a deal announced today by Jones Lang LaSalle and Eric Young & Co.

A leading consultant to the property and building industry, Watts will lease a 2,360 square-foot suite on the second floor of the building at 68-70 George Street for £53,000 a year until 2015. Currently based at 29A Stafford Street, Edinburgh, Watts is scheduled to move into the larger and more prominent space on 27 August 2007. This move signifies Watts' growing presence across Scotland.

Neil Tweedie, surveyor with Jones Lang LaSalle Edinburgh, which acted for the assignor BowLeven Plc, said: "This deal is evident of the continued strong demand for good quality city centre accommodation below 5,000 square feet. Jones Lang LaSalle was able to assign BowLeven's leasehold interest with minimal marketing."

Jones Lang LaSalle acted for BowLeven while Eric Young & Co represented Watts Group Plc.



DTZ expands into US

DTZ Holdings Plc has made an investment in FHO Partners, LLC, a privately owned commercial real estate brokerage firm based in Boston, Massachusetts, USA.

Global platforms are increasingly important for real estate advisers, as clients are taking a worldwide perspective on procurement, solutions and service delivery. Through the investment in FHO Partners, DTZ, one of the top four global advisers in commercial real estate with a strong presence in Europe, Asia Pacific and other parts of the world, will expand and strengthen its real estate advisory services in the United States.

The investment in FHO Partners complements DTZ's transaction with New York-headquartered DTZ Rockwood last year, which provides both transactional and advisory capital markets services throughout North America. FHO Partners will be rebranded DTZ FHO Partners.



Plans approved for Manchester housing scheme

The detailed plans for Gorton Monastery Village in Gorton, east Manchester have been approved by Manchester City Council, giving the go-ahead for work to start on site. The scheme will comprise 69 two and three storey family houses on a 1.9 hectare site next to Gorton Monastery, just three miles east of Manchester City Centre.

National housebuilder, Gleeson, along with their architects Taylor Young, has designed eight unique house types specifically for this scheme that offer a range of sizes and layouts from two to four bedrooms. This includes 19 detached, 34 semi-detached and 16 terraced houses. All houses will benefit from a private garden and an allocated parking space. A tree lined boulevard will run through the centre of the scheme and an area of public open space has been incorporated into the scheme to create a family orientated feel.

The three storey townhouses on Gorton Lane will have metal railings to the front creating an attractive street scene reminiscent of the historical properties formerly found in the area. The new houses will be built in a traditional style with brick walls, slate effect roof tiles, stone parapets and cills, timber style doors and juliet balconies. In keeping with both the Victorian industrial and residential architecture in the area, paired gables and generous proportions have been incorporated into the design including large, long windows that will create a light, airy feel.

The housing development, which is believed to be the first in the UK to use aspects of sacred geometry as a basis for its masterplan, sits next to the historic Pugin designed grade II* Gorton monastery and is designed to achieve an 'excellent' Eco homes rating giving the homes very high insulation standards, energy saving appliances, off-street parking and cycle and bin storage.

This scheme is also designed to meet national regeneration agency English Partnerships Lifetime Homes' standards, which promote housing that is flexible, adaptable and robust to changing social and demographic trends. Lifetime Homes have 16 design features (both interior and exterior) that ensure a new house or flat will meet the needs of most households.

Tom Russell, New East Manchester's Chief Executive said, "Bringing high quality family homes to this part of east Manchester sends out a very clear message that this area is undergoing a significant transformation and we have great confidence in its future. We have designed this scheme to sit respectfully next to, and enhance the historic monastery building and reflect the wider Gorton area. Creating an innovative new urban village with very high standards of architectural design is incredibly exciting."

David Chilton, Area Director for English Partnerships said, "This scheme clearly demonstrates how a collaborative design process can create a high quality residential development. I am particularly pleased with how this exemplar project builds on the success and design of the restored Monastery whilst together they will lead the transformation of this area of East Manchester."

Work is due to start in the coming autumn.



Office Development in Inverness Sold for £975,000

Joint venture partners AWG Property and WG Mitchell have sold an office development in Inverness for £975,000.

The 13,138 sq ft property at 35a Harbour Road in Inverness is currently the northern HQ of support services company Morrison Construction, which has leased the building until July 2009.

35a Harbour Road was purchased by the joint venture partners in March 2006 and has been sold on to Upland Developments.

AWG Property managing director Tony Donnelly said: ?The sale of 35a Harbour Road is another deal in the north of Scotland and demonstrates that we are continuing to look outwith the main central belt markets in order to achieve value.

"This property was always intended to be part of a short-term strategy for AWG Property and WG Mitchell, and, as such, we felt now it was an appropriate time to make the disposal."

Patrick Hegarty, managing director of WG Mitchell said: "This disposal has released further capital, allowing us to pursue our strategy of seeking out property with active asset management opportunities.

"Our first ventures into markets in the north of Scotland have been very successful and we are actively seeking further opportunities in these areas."

AWG Property and WG Mitchell were advised by Savills and Upland Developments were advised by Kerr McWilliam.

The joint venture partners have recently launched a new £150 million fund which marks the second phase of the successful investment fund set up by the two companies in April 2005. The initial £100 million AWG/WG Mitchell Property Fund was created to focus on investment across Scotland and has been a huge success.

AWG Property and WG Mitchell aim to build on this success by extending the fund to over £250 million over the next 12-18 months, with the focus remaining purely on Scottish investments, particularly where there is a potential to extract value through active asset management across all sectors - office, retail and industrial.

The fund has recently made a number of high profile purchases, including the Excel Centre in Aberdeen's Exploration Drive for £11.3 million, Westside Plaza shopping Centre in Edinburgh for £23.3 million and a three acre site at Steads Place in Edinburgh for £6.25 million.



Savills report on second quarter shopping centre market

According to Savills' latest Shopping Centre bulletin, quarter two has seen over £1.42bn of shopping centres traded in just 14 deals. Whilst this indicates that fewer schemes have been transacted compared to quarter one, the average lot size reached £118.57m, which is almost double that in quarter one.

Mat Oakley, director at Savills, comments: "The emergence of this new trend of fewer deals and larger lot sizes being transacted indicates that investors are favouring quality over quantity. The average deal size for quarter two is £118m, which is significantly higher than that of quarter one at £60m. The total turnover for quarter two is down on quarter one at £1.4bn, however the combined total for the two periods is £3.06bn, which lies above the £2.3bn traded this time last year and shows good growth within the market."

The report also states that average initial yields still remain low but have now moved out 47 basis points in 12 months to 5.32% showing a slight softening from the start of 2007. Despite this, it is reported that 40% of all shopping centres traded in quarter two reflected an initial yield below 5%.

The divergence of primary and secondary asset yields is gathering pace and currently stands at 75 basis points. The research indicates that this could continue to 125-150 basis points over the next 6-9 months. Prime equivalent yields currently stand at 4.75%.

Nick Hart, director at Savills, comments: "One key issue to consider is the disjoint between market reality and asset valuations on the secondary stock. Much rests on the 'responsible valuers' and the frequency with which such assets are valued. This will determine just how long the impasse will last.

"Fortunately, there is now evidence to help this process and it will be very interesting to monitor when assets come for refinancing, given the yield shift, just what further equity input banks will be asking owners to put into their assets as aggressive loan to values fall to circa 70% in some cases."

In terms of investor groups, the research shows that no one sector has dominated purchases in quarter two, but property companies have been increasingly active this half year as vendors, accounting for over 64% of all shopping centre sales.

According to Savills' data, there are currently 15 shopping centres under offer with a capital value of £1.93bn, with a further £1.97bn in the market. The number of centres that have failed to sell is steadily growing as vendor expectations are not matched by what prospective purchasers are able to pay. This has been driven by the three rises in the Bank of England base rates since January 2007, which have had a tangible impact upon the transactional power of many debt-driven purchasers.

The report states that global money continues to be attracted to the prime assets. The key investors continue to be Ivanhoe Cambridge, QIC, GIC and Apollo having accounted for 60% of capital value in transactions conducted in the first six months of 2007. There is also expected to be an increase in American and Asian investors attracted to the market, which will help to keep yields low at the prime end.



Wednesday, August 01, 2023

Experian predicts commercial property investment slowdown

Commercial property investment is suffering a sharp slowdown which will continue over a number of years, according to the latest property forecasts by Experian®, the global information solutions company.

"We are not optimistic about the next few years," commented Simon Marx, head of Real Estate Forecasting & Analysis at Experian. "Investors are becoming nervous and it is not clear which locations or sectors will yield the best future returns. As a result, lower risk havens such as London offices are being targeted."

Marx is quick to point out that it is not all doom and gloom. "Covering over 220 markets in the UK, Experian's property forecasting service is well placed to separate the top performers from the rest of the pack. For those that are over-exposed to the worst performing sector, the retail market, there are still strong gains to be made in Eastern UK. Our forecasts for rental growth in markets such as Cambridge are quite positive. And long-term holders of retail property will take comfort in the fact that we expect the retail sector to re-emerge as one of the strongest over the medium to long term. There are also industrial markets in and around London with bright prospects."

Marx adds: "An all-out property crash is not on the cards. We believe that active foreign investors will continue to target the mature, liquid UK property market, albeit more cautiously. The arrival of hedge funds and the exponential growth in indirect trading are good indicators of a rapidly maturing asset class and underline the UK's standing as the pre-eminent property market in Europe."



Nationwide sell Wakefield building in £6m deal

A prominent building at Paragon Business Village in Wakefield has been sold. The 25,000 sq ft building, occupied by Nationwide for its regional call centre operation was sold to an investor for £6.02m by site owner and developer Yorkcourt Properties.

The building was acquired on behalf of a client by Manchester based Property Investment company Jaymar Estates and will form part of a property portfolio of seven buildings worth £32m.

The speculatively built premises were leased to Nationwide Building Society in December 2005 following a national search for suitable premises for its fifth UK call centre. This demonstrates the considerable strength in Paragon Business Village in meeting demand in the region for high quality office accommodation where accessibility is key.

Paragon Business Village is a 130 acre mixed-use site conveniently located 1 mile from junction 41 of the M1 on the A650. On-site amenities include a Bannantyne Health & Fitness Centre, Just Learning Crèche, Premier Travel Inn and Italian restaurant.

The agents acting on behalf of Yorkcourt Properties were CBRE and for Jaymar Estates Steadman Riley Chartered Surveyors.



Growth strategy delivers record profits for HFD Group

One of Scotland's leading providers of serviced and managed office accommodation, HF Developments Group, has posted strong interim results with a turnover of £50million and a pre-tax profit of £4.74million for the six months from September 2006 to March this year.

The previous financial year delivered a turnover of £42million and a pre-tax profit of £3.1million.

HFD Group is currently developing two of the country's leading business parks, Strathclyde Business Park and Hamilton International Park, which provide over 1.65 million square feet of business and lifestyle space and support over 10,000 jobs. HFD is also currently developing 130,000 sq ft of prime grade A office space at G1, Glasgow.

Managing Director of HFD Group, William Hill, credits the strong performance to the group's ongoing growth strategy and the increasing demand for high quality office space set in appropriate and attractive settings. Hill expects to deliver a turnover of £100million and a pre tax profit of £10million by the end of the current financial year. He said: "These latest results reflect our ongoing commitment to continually improving the working environment for our tenants and offering high quality and flexible office accommodation to suit all needs.

"We have invested heavily over the last year in improving services and amenities at each of our business parks and I believe it is this investment that has set us apart from our competitors and ensured that we remain at the top of our game."

Recent investment has included the £6.2 million upgrading of the existing road infrastructure at Strathclyde Business Park, the introduction of Project ATLAS, a new pilot scheme to upgrade the technology infrastructure for Scottish businesses, and the contruction of several new buildings, with 56,000 sq ft under construction at Strathclyde Business Park and 64,000 sq ft underway at Hamilton International Park. The development of a £5.25million Retail Parade at Hamilton International is also nearing completion, with a further phase of development due to start on site this year.

William added: "We aim to capatalise on our development experience by undertaking challenging schemes in the City Centre. Our first city centre development, G1, at the very heart of Glasgow holds iconic status and we are delighted to get the opportunity to develop G1 for future generations of the city, with construction now well under way."

HF Developments and AWG Property recently announced the end of their successful 15 year joint venture partnership at Strathclyde Business Park and Hamilton International Park. HF Developments is now the sole developer of Strathclyde Business Park and Hamilton International Park.

With an investment portfolio currently valued at over £100 million and turnover set to double by the end of the current financial year, Hill is confident about HFD's future: "The latest results underpin our growth strategy and demonstrate our commitment to providing flexible office space of the highest standard."



Barratt Homes take floors at Buchanan Gate Business Park

SDG Property Holdings Limited today announced the letting of the first and second floors of Building 3C at Buchanan Gate Business Park, Stepps to Barratt Homes Limited.

Building 3C has been developed speculatively and in total extends to 20,000 sq ft. The building offers highly specified office accommodation including comfort cooling.

In total, Barratt Homes have taken a lease of 13,334 sq ft at a rental of £15.75 per sq ft, including 46 dedicated car parking spaces.

Andy Richardson of SDG Property Holdings commented: "We are delighted to have secured such a high profile occupier as Barratt Homes. We have enjoyed significant success at Buchanan Gate Business Park which is testament to the high quality of accommodation being provided and the strategic location of the Park immediately adjacent to the M80 motorway. We will be announcing further speculative development plans in the near future."

Ryden and Donaldsons acted for SDG Property Holdings Limited. The ground floor of Building 3C remains available extending to 6,700 sq ft. Other occupiers at Buchanan Gate Business Park include HBG, The Richmond Fellowship and Tulloch Group.



Nissan acquires prime retail units in Ayr

Nissan UK Limited, advised by Drivers Jonas, has acquired three prime retail units totalling 7,140 sq ft in High Street, Ayr.

The properties were purchased for £4.3m, reflecting a net initial yield of just under 5%. The investment commands a total annual passing rent of £225,500 from three tenants, Country Casuals, H3G and Thorntons, with rent reviews due in 2007, 2008 and 2010. The leases have an average unexpired term of over 11 years to lease end.

Richard Spence, associate partner at Drivers Jonas, said "We consider this acquisition for Nissan to be an extremely attractive proposition as a fully let parade of three units in a prime position on High Street, Ayr. The parade, located between the Kyle and Ayr Central shopping centres, is well situated to capitalise on Ayr's increasing strength as a retailing destination. We consider that there is good potential for competitive rental growth following the establishment of Ayr Central and the continued increase in the loyalty from shoppers within Ayr's expanded catchment area."



Blackburn town centre in line for £10m facelift

Blackburn with Darwen Borough Council has appointed Jones Lang LaSalle to advise on a major redevelopment of Blackburn's town centre market place. The current site will become vacant in 2010 when the existing market moves into the soon to be extended Mall, adjacent to the existing market place. The 2.5 hectare site, which is set for a £10m face lift, will make way for a proposed major mixed use scheme.

Donna Barber, Associate Director in Jones Lang LaSalle's Development and Asset Strategy team said: "This prime site is at the heart of the town centre and has the potential to deliver major regeneration benefits to the town including new shops, jobs, homes and visitor attractions. The consultants, led by Jones Lang LaSalle are working to make sure that the options being considered complement other developments in the town including the new Cathedral Quarter and The Mall."