offices nw: michael hawkins, colliers international
DESCRIPTION
Michael Hawkins, senior director, Colliers InternationalTRANSCRIPT
North West Offices – the state of the marketMichael Hawkins, National Offices, Colliers International
2
What we’re going to cover
1. Introduction
2. National Markets Sentiment
3. NW Regional Overview- Regional Revolution- H1 Transactional Activity- Who’s selling? / Who’s investing?- Schemes to watch
4. Spotlight on Manchester
5. Close
3
The National Picture
Commercial property investment volumes UK-wide set to reach £60bn before year end – 15% up on 2013
The proportion of investment in London shrinks as investment in the regions grow
Investment volumes outside of London (YTD) have already surpassed the full year total for 2013
4
NW Regional Opportunity
2015: The Year of the Regional Revolution
Devolution of powers from Westminster will impact greatly on the NW region as a key driver of
the ‘Northern Powerhouse’ economy.
5
North West H1 Transactional Activity
Transactional activity up on H2 2013
800,000 sq ft of space let or sold in H1 2014
Vacancy rates just under 18.6% in H1 2014 (MCR at 14.4% and Liverpool at 17.6%)
H1 2008
H2 2008
H1 2009
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
10.0%
12.5%
15.0%
17.5%
20.0%
22.5%
25.0%North West Manchester Liverpool
% V
aca
ncy
Ra
te
6
Manchester City Centre – Our Playground
• 19 Million sq ft of existing Offices
• £70 Billion Capital Value
• £266 Million annual rent
• 8 Million sq ft of Offices to come
• £35 Billion Capital Value
• £220 Million annual rent
• Investment fees of £350 million
• Leasing fees of £16.5 million
7
Manchester Snapshot
SUPPLY Total office stock 19.00m sq ft
Vacancy 2.7m sq ft (14.2%)
“Genuine” vacancy 1.2m sq ft (6.3%)
Total Grade A office stock – 4.5m sq ft
New build prime CBD vacancy – 335k sq ft (8%)
TAKE UP H1 total take up of 801,513 sq ft (same level as 2013
as a whole)
10 year average is 880,000 sq ft
2010 a record year 1,325,000 sq ft
Take up analysis of 2011 (700,000 sq ft) 2012 (790,000 sq ft) and 2013 (880,000 sq ft)
Significant deals for Q2 include: Ford Credit at First Street; Slater & Gordon at 58 Mosley Street; Towergate Insurance at 3 Hardman St; Economic Solutions at Churchgate & Leigh House
DEMAND 2.0m sq ft of 30k sq ft + lease expiries 2014 – 2017
Key current requirements: Addleshaws, Bupa, DLA Piper, Ernst & Young, Gazprom, Shoosmiths, Squire Patton Boggs and Weightmans
Typical Headline Rents Rent
Prime CBD new build £30.00 - £32.00 per sq ft
Fringe new build £25.00 per sq ft
Prime CBD refurbished £20.00 - £25.00 per sq ft
Fringe refurbished £15.00 - £19.50 per sq ft
Term Certain Grade ANew Build
Grade A Refurbished
5 years Not available 15 - 18 months rent free
10 years 24 – 30 months rent free
30 – 36 months rent free
TYPICAL INCENTIVES:
TYPICAL HEADLINE RENTS:
Yield %
Prime 4.5% - 5.75%
Secondary 6.5% - 8.0%
TYPICAL YIELDS:
8
Manchester Snapshot
Schroders’ acquisition of City Tower – May 2014
NW Developer / Landowners – Key Players
Historic Key Players - Developers
Future Key Players – Next 5 Years - Developers
10
NW Investment – Key Players
New Investors
Traditional Investors
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Key Schemes - Indicative
Noma- 4 million sq ft - Mixed-use scheme
St Peter’s Square- New business district- Landmark / London
Scottish / 3 St Peters / Peter House
ITV Granada site- 13-acre - Residential-led
mixed-use development
Embankment- First phase 101
Embankment - 167,000 sq ft Grade
A office development
12
Schemes to watch - Manchester
Landmark- 178,000 sq ft- Hines/Manchester
3 St Peter’s Square- 110,000 sq ft- CIS c/o AXA Real
Estate
Cotton Building- 340,000 sq ft /
240,000 sq ft- Allied London
Astley & Byrom House- 250,000 sq ft- CBREGI
11 York Street- 85,000 sq ft- Aberdeen & Rank Xerox
Pension Fund
Brazennose House- 150,000 sq ft- M&G
13
Looking Ahead
What does the future look like for the NW Region?
Investment volumes will cruise towards a full year total of £60bn (15% up on 2013’s £52bn)
Devolution of power to the regions
North West-based – National Influence
90%10% 90%10%
Michael Hawkins Director
Head of NW Offices
Nick NelsonAssociate Director
NW Offices
Peter GallagherDirector
NW Offices
Scott ShufflebottomGraduate
NW Offices
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