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QUARTER ONE 20 16
Your Property. Our Business.
CON TE NTS Table of contents 03
In t r o d uct i o n
04
In v es t ment
07
N o t a b l e I nv es t ment Tran sac ti on s
07
C u r r ent l y O n T he M a rk e t
08
O f fi ce
09
N o t a b l e O ffi ce Ta k e-Up
10
Retail
12
In dus t r i a l
14
T he Tea m B ehi nd T h e Re se arc h
IN T RO DUCTIO N Qua rter 1 2016
Cerberus have been particularl y active in this period selling the 15 acre Sirocco Site
I n ve s t m e n t
t r a n s a c t io n s
and
Cerberus
s e llin g o u t t h e ir lo a n bo o k h a ve dr iven t h e m a r ke t in t h e f ir s t Qu a r t e r o f 2016. C e r be r u s h a ve be e n pa r t ic u la r ly a c t i v e in this period agreeing the 15 acre Sirocco Site opposite the Waterfront hall, the Castlebawn de ve lo pm e n t s it e in Ne wt o w n a r ds , the long awaited Royal Exchange development s it e in B e lf a s t c it y C e n t r e a n d a n um b e r o f s ign if ic a n t r e s ide n t ia l s it e s in N o r t h Do w n a n d L o n do n de r r y.
3
I NV E S T M E N T Q1 2016
Brexit Looms L is n e y’ s Q4 u pda t e r e po r t e d a n o pt imi s t i c o u t lo o k f o r t h e NI in ve s t m e n t m a r k e t i n 2016 wit h s u s t a in e d t r a n s a c t io n vo l u m e s dr ive n by in c r e a s in g in ve s t o r s e n t i m e n t
S TR ON G TRANSAC TION VOL UM E S
a n d t h is h a s c o m e t o f r u it io n in t h e f i r s t Qu a r t e r o f 2016. A
n u m be r
of
s ign if ic a n t
transactions
h a ve le d t o in ve s t m e n t vo lu m e s r e a c h i n g
S U STAI N ED DEMAND
£ 120m , w it h a f u r t h e r £ 140m c u r r e n t l y on t h e m a r ke t in c lu din g C it i Gr o u p’ s B el f a s t HQ in Ga t e wa y Of f ic e s , Da m o lly Re t a i l
B RE XI T MAY STALL Q 2
P a r k a n d t h e B r it is h L a n d Po r t f o lio , ma d e
I N VE ST M ENT ACTIV ITY
P a r k a n d Te s c o C r a iga vo n .
u p o f L is n a ge lvin S C , R ive r s ide Re t a i l
The most significant new entrant to our market has been Tristan Capital
D E C L A N F LYN N , MD , L I S NE Y N I Declan Flynn joined Lisney i n 1 9 9 2 a n d w a s a p p o i n t e d Ma na gin g Dir e ct o r in 2002. He is a Member of the RICS a n d ha s o ve r 20 ye a rs c o m m e r ci al pr o per t y e x pe r ie n c e. F o llo wing his a ppo int m ent a s Man a ging Dir e ct o r h e e x pa nded t h e bu s ines s mo s t n o t a bly in t he a r ea o f a s s et m a na ge m e n t a c r o s s the U K. De c la n is in vo lve d in a l l aspects of the business f o c u s in g pr im a r ily o n bu s in e s s de ve lo pm e n t .
5
I NV E S T M E N T Q1 2016 A l th ou gh Q1 inv est ment v o lumes ha ve
A s a c o n s e qu e n c e o f t h e o n go in g
r em ai n e d str ong , we exp ect t he numbe r
e c o n o m ic u n c e r t a in t y, t h e I n t e r n a t i o n a l
of i n ve stm e n t t ransact io ns t o d eclin e in
Mo n e t a r y F u n d h a s c u t it s f o r e c a s t f o r
Q2 be f or e r eco v ering t o ward s t he e n d
U K gr o wt h t h is ye a r t o 1. 9% , f r o m t h e
of th e ye ar .
2. 2% it f o r e c a s t pr e vio u s ly.
Th e f oc u s f o r t he next few mo nt hs will
I n a s im ila r in s t a n c e , t h e I MF ’ s f o r e c a s t
be on “B REXIT ” and t he EU referen du m
f o r glo ba l gr o w t h w a s c u t t o 3. 2% f r o m
a nd we e x pect t hat mo st inv est o rs will
3. 4% . T h is s u gge s t s t h a t a B r e x it co u l d
tak e stoc k and await t he o ut co me o f
h a ve s e ve r e im plic a t io n s n o t o n ly
both vote s and lo cal elect io ns b e f o r e
r e gio n a lly, bu t a ls o o n a glo ba l s c a l e .
m ak i n g f u r th er inv est ment d ecisio ns . On a m o r e po s it ive n o t e , U K in f la t ion h i t Research from Oxford Economics indicates
it s h igh e s t r a t e in 15 m o n t h s in M a r c h ,
th at th e N I e co no my may b e mo re
wit h t h e C o n s u m e r P r ic e I n de x r is in g b y
vu l n e r abl e t o t he t y p e o f st ruc t u r a l
0. 5% a n d c o r e in f la t io n t o 1. 5% .
c h an ge s wh i ch a UK exit fro m t he EU w ou l d e n c omp ass, co mp ared t o t he r e s t
W it h t h is in m in d, a pr e f e r a ble o u t c o m e
of th e U K an d it remains t o b e seen w h a t
t o t h e E U R e f e r e n du m bu o ye d b y a
i m pac t th is will have on levels of Foreign
s t r e n gt h e n in g U K m a r ke t m a y h a ve s o m e
Direct Investment.
po s it ive c o n n o t a t io n s f o r No r t h e r n I r e la n d m o vin g f o r w a r d.
IMF FORECAST FOR UK GROWTH
IMF FORECAST FOR GLOBAL GROWTH
1.9%
3.2%
2016
2016
C u t f r om p rev io usly fo recast
C u t f r o m pr e vio u s ly f o r e c a s t
f ig ure o f 2.2%
f igu r e o f 3. 4%
NOTA B L E IN V E STME NT TR ANSAC T IO N S Q1 2016 INCOME
SECTOR
£M
NIY/£PSF*
Bloomfield Shopping Centre
Shopping Centre
54.15
7.66%
Ellandi & Tristan Capital
The Outlet & Junction One
Open Retail Park
32.0
9.0%
The Lotus Group With
PURCHASER
Tristan Capital Capital House.
Office
11.0
8.1%
Melcorpo
Oxford House & Gloucester House
Office
7.75
9.5%
Wirefox
River House
Office
7.0
£80 PSF
Mercer Real Estate
Donegall Square North
Office
5.95
£218 PSF
Private Investor
*Where NIY is unavailable for vacant property £PSF has been provided.
CUR REN T L Y O N THE MA R KE T Q1 2016 ASKING PRICE £M
NIY
Part Open Retail Park
33.5
6.89%
Agreed
Gateway Offices
Office
29.0
6.5%
Under Offer
Lisnagelvin Shopping Centre
Shopping Centre
17.2
6.9%
Under Offer
Downe Retail Park
Open Retail Park
17.0
6.75%
Available
Riverside Shopping Centre
Shopping Centre
14.32
6.78%
Available
Shaftesbury Square & Bow Street
Office/High Street
9.1
5.8%
Sale Agreed
PROPERTY
SECTOR
Damolly Retail Park
STATUS
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O F F I CE Q1 2016 T h e t o n e o f t h e NI o f f ic e m a r ke t in 2 0 1 5 w a s r e s t r ic t e d s u pply o f Gr a de A s t o c k resulting in an inability to service demand a n d t h is h a s be e n c o m po u n de d f ur t h e r in t h e f ir s t Qu a r t e r o f 2016.
Take up has reached c.160,000 sq ft in Q1 2016 Ta ke u p o f o f f ic e s pa c e r e a c h e d c i r c a 160, 00s q f t . in Q1, t h e m a jo r it y o f w h i c h w a s m a de u p o f r e f u r bis h e d e x i s t i n g
FU R THE R D E C R E AS E IN S U PP L Y SU S TA I NE D D E MA ND STR O NG RE D E VE L O PME NT P I P E L I NE
8
N OTA B L E O F F ICE TA KE -UP Q1 2016 OCCUPIER
SIZE (SQ FT)
LOCATION
Liberty IT
26,000
Adelaide Exchange, Adelaide Street, Belfast
DSD
22,727
Cleaver House, Donegall Square North, Belfast
Belfast Telegraph
17,506
Clarendon Dock, Belfast
Navi Net
15,500
Northern Ireland Science Park, Belfast
NBC Universal T/A BRS Golf
10,173
City Quays, Belfast
NIE
10,000
Old Channel Road, Belfast
This will put further pressure on rents which have been rising s pac e , r ath er t han new b uild s and in t h e
A s a r e s u lt o f t h e la c k o f s u pply w e are
a bse n c e of new d ev elo p ment s co m in g t o
also seeing more landlord friendly l e a s e
the m ar k e t, t he g ap b et ween d emand a n d
terms with incentive packages lessening
s u ppl y wi l l und o ub t ed ly leng t hen.
a n d t h e ga p be t we e n h e a dlin e a nd n e t e f f e c t ive r e n t s t igh t e n in g.
We are aware of a number of active requirements wh i c h th e current sup p ly canno t f u lf il,
A lt h o u gh c u r r e n t s u pply is lim it e d , t h e
notabl y th at o f HM R C which is se e kin g
outlook for the medium term is relatively
10 0 ,0 0 0 sq ft . o f G rad e A sp ace.
po s it ive wit h de ve lo pe r s f o c u s s ing o n r e de ve lo pm e n t /r e f u r bis h m e n t pr oj e c t s
T h i s wi l l put furt her p ressure o n r e n t s
in a n a t t e m pt t o de live r m u c h n e e d e d
wh i c h h ave b een st ead ily rising s in c e
n e w s pa c e .
20 1 4 , a n otab le examp le o f where r e n t s have gott to is t he Kilmo na reg ear o f t h e
K ilm o n a H o ldin gs a n d Mc A le e r & R u s h e
Allstate lease in Lanyon place at a headline
a r e s e t t o be a c t ive in t h is s pa c e w i t h
fi gu r e of ÂŁ2 0 p er sq ft .
pla n n in g pe r m is s io n a pplie d f o r o n a n u m be r o f c it y C e n t r e S it e s .
9
RETA IL Q1 2016
De m a n d c o n t in u e s t o be s t r o n g f o r pr im e C it y C e n t r e r e t a il pit c h e s a s
PR I M E CITY C ENTRE PE R FO RMING STRONG L Y
e vide n c e d r e c e n t ly by L if e s t yle Sp o r t s le a s in g c . 8, 000 s q f t . o f s pa ce i n Vic t o r ia S qu a r e S C wh ic h wa s pr e vio u s ly o c c u pie d by B a n k F a s h i o n .
VACAN CY RATES D E CL IN ING F U RTHER
Z ON E A RENTS TRE N DING U PWARDS TOWAR DS £150 PSF
Prime rents on Donegall Place are trending up towards £150 psf We a r e a ls o a wa r e o f a n u m be r o f o t h e r o c c u pie r s wit h e it h e r a c t iv e r e qu ir e m e n t s o r de a ls c u r r e n t ly i n le ga ls .
10
With vacancy rates declining, we expect pr im e r e n ts to co nt inue t rend ing u pwar ds an d Zo ne A t o reach £ 150 pe r sq f t on D o neg al Place. Th is i n tu r n m ay hav e a p o sit iv e imp act on se c on dar y lo cat io ns as ret ailers lo o k towar ds the p erip hery o f t he Cit y C en tr e i n se ar ch o f suit ab le sp ace. A s a r e su l t of Trist an Cap it al’s recent
Mo vin g f o r w a r d we e x pe c t pr im e lo c a t i o n s
s pe n di n g spr e e and t heir act iv e asset
t o c a r r y o n pe r f o r m in g s t r o n gly w it h
m a nage m e n t we are aware o f a numb er
s e c o n da r y pit c h e s be n e f it t in g a s a re s u l t
of o n goi n g de als wit hin t heir schemes
a n d r e gio n a l t o w n s t o c o n t in u e t h e ir s l o w
to UK retailers
r e viva l.
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I ND U S T R IA L Q1 2016
L I MI TE D S U PP L Y S U S TA I NE D D E MA N D U PWA R D S P R E S S U RE O N R E NTS TOWA R D S F E AS I B L E D E VE L O P ME N T L E VE L S Lo w le ve ls o f t r a n s a c t io n a l a c t ivit y in 2015 ha v e continued into Q1 of 2016 and this is being driven on the supply side by the lack of availability s pa c e , pa r t ic u la r ly o ve r 50, 000s q f t O n t h e de m a n d s ide lo w o il a n d c o m m o dit y p r ic e s a r e c a u s in g a we a kn e s s in de m a n d f r o m ma n u f a c t u r e r s . Th e n e t r e s u lt o f bo t h m e a n s ve r y f e w tr a n s a c t io n s o f n o t e c o m ple t in g in t h e f ir s t Q u a r t e r o f 2016
Low oil and commodity prices are causing a weakness in demand Wit h we a k de m a n d c u r r e n t ly o u t s t r ippin g lim i t e d supply, many operators are undertaking design and build projects in order to meet their requirements.
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Th i s i s e vi denced b y aero sp ace manufacturer RLC expanding its operation to th e L an g fo rd Lo d g e sit e in Crum lin , a ÂŁ3 5 m pr o ject which is b eing b ac k by I n ve st N I to t he t une o f ÂŁ 6.5m. I n addi ti on t o R LC and d esp it e re c e n t developments with firms such as Bombardier, there is a strong appetite from companies ope r ati n g i n t he aero sp ace ind ust r y f o r good qu al i ty sp ace and we exp ec t t h is tr e n d to c ont inue.
I n t h e m e diu m t o lo n g t e r m , w e e xp e c t pr e s s u r e o n r e n t a l va lu e s t o c o nt i n u e
In the short term, the trend of decreasing
pushing them towards viable speculative
avai l abi l i ty i s likely t o co nt inue wit h f e w
de ve lo pm e n t le ve ls o f ÂŁ 5 pe r s q f t .
oppor tu n i ti es b eco ming av ailab le.
m a kin g f in a n c e m o r e r e a dily a va ilab l e .
THE TEAM Behind the research
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D E C L A N FL YN N
N I CKY F INNIESTON
ST EPHEN C HAMB E RS
M a nag i n g
Director
Associate Dir ector
Director
(Retail & Investment)
(Investment & Finance)
A ND R E W GAWL E Y
AOIF E B RENNAN
TANYA DUF F Y
A s s o ci a t e D i recto r
D i v isional Dir ector
Property Research e r
(Agency)
(Research Division)
(Research Division)
Your Property. Our Business.
LISNEY NORTHERN IRELAND 1st Floor Montgomery House 29-33 Montgomery Street, Belfast, BT1 4NX 028 9050 1501 info@lisney-belfast.com
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