www.lisney.com
QUARTER TWO 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 Quarter 2 2016
See EU Later...
Whether
. . .was on e of t he many t he t ruly red- t o p
I t e s s e n t ia lly s t a lls de c is io n m a ki n g a n d
w or th y h e ad lines sp lashed acro s s t h e
c r e a t e s a n e n vir o n m e n t o f c o n s o l i d a t i o n
pape r s on Ju ne 24t h 2016.
r a t h e r t h a n in ve s t m e n t a n d e x pa n s i o n .
Th e opi n i on p o lls sho wed a narro w le a d
B u t , in t h e s h o r t t e r m , t h e s t a t u s q u o
f or r e m ai n i n t he run up t o t he ele c t io n
r e m a in s . Da vid C a m e r o n w ill s t e p d o w n
a nd m an y of us t ho ug ht t he “lea p in t o
a s P r im e Min is t e r a h e a d o f t h e To r y
th e u n k n own” wo uld b e t o o much f o r t h e
pa r t y c o n f e r e n c e in Oc t o be r a n d h e n c e
u n de c i de d and R emain wo uld p rev a il.
t h e Go ve r n m e n t w o n ’ t t r igge r “A r t i c l e
it ’ s
the
s t o c k,
pr o per t y
or
c u r r e n c y m a r ke t s , t h e y h a t e u n c e r t a i n t y.
50” ( t h e m e c h a n is m t h a t a llo ws f o r a C om m e n tators, pol i ti c i an s ou tc om e
will is
eco no mist s fo recast ,
effect iv ely
b ut
and
m e m be r s t a t e t o e x it t h e E U ) u n t i l t h e
t h is
n e w P M is n a m e d.
unp reced e n t e d
- an d th at i s t he crux o f t he issue.
(Continued on page 5)
3
I NV E S T M E N T Q2 2016
The People Have Spoken Strong
in ve s t m e n t
vo lu m e s
in
the
f ir s t Qu a r t e r o f t h e ye a r w e r e m e t b y c a u t io u s o pt im is m w it h t h e im pe n din g E U R e f e r e n du m o n t h e h o r iz o n .
I NVE STOR DEC ISIONS D EL AY E D
A s a n t ic ipa t e d, m a n y in ve s t o r s o pt ed t o de la y de c is io n m a kin g o n t h e a s s u m p t i o n that June 23rd would disperse Brexit driven u n c e r t a in t y a n d br in g f u r t h e r c la r it y t o t h e
U NCE R TAINTY REIGNS
e c o n o m ic la n ds c a pe . This in turn led to a decline in investment
D ECL I N E D TRANSAC TION R AT E S PRE-BREXIT
t r a n s a c t io n s in Q2, r e a c h in g o n ly £ 13 . 5 m , with a further c. £49m on the market including Downe Retail Park, Lisnagelvin Shopping Centre and the Tower Centre in Ballymena.
Fou r gr e ate r Belfast Iceland Inv est m e n t s , let on c o-te rminus leases wit h 9 ye a r s u n e x pi r e d h av e also recent ly co me t o m ar k e t. We h ave al so seen sev eral sub £ 1m inve stm e n ts
t ransact ,
which
is
not
u n su r pr i si n g as hig h net wo rt h’s s e a r c h
See EU Later . . . ( Continued from page 3)
f or vi abl e i nv est ment o p t io ns fo r t h e ir pe n si on s i n t he mid st o f a hist o rica lly lo w inte r e st r ate env iro nment .
n e go t ia t io n a n d pr a c t ic a l i t i e s
I n th e wak e o f t he v o t e t o leav e , t h e m ar k e t
h as
exp erienced
standstill with uncertainty
A n d e ve n wh e n t r igge re d , t h e
a
b it
of
a
stalling decision
m ak i n g.
o f a n e x it will t a ke a r o u n d t w o ye a r s t o wo r k t hr o u g h , m e a n in g t h a t o u r e x it i s f a r f r o m im m e dia t e . A s s u c h a t t h is e a r ly s t a g e i t is im po s s ible t o pr e d i c t o u r
HOW T HE VOTES STOO D
future
a r r a n ge m e n t s
on
t r a din g wit h t h e EU .
REMAIN
LEAVE
W h a t e ve r t h e o u t c o m e , w e a r e like ly t o e x pe r ien c e a bit o f a s t a n ds t ill u n t i l t h o s e in ve s t in g s e e m o r e c e r t a i n t y a r o u n d t h e f u t u r e bus i n e s s la n ds c a pe .
48.1%
51.9% W h a t e ve r
BRITAIN VOTES LEAVE
that
la n d s c a p e
lo o ks like , we n e e d a c l e a r e r u n de r s t a n din g qu ic kly,
w it h
of
it the
-
and hope
our
be in g t h a t t h o s e in c h a r g e
m ar k e t r e m ai n st ro ng , T he sup p ly /d em a n d
w h o h a ve be e n s o m e w h a t t a k-
dyn am i c s
e n by s u r pr is e a c t pro m p t l y
Th at
sai d
t he in
c om m e r c i al
o ur
fund ament als t wo
p ro p ert y
mo st
in
p ro m in e n t
sect o rs
( o f f ic e
and
de c is ive ly
throughout
a nd r e tai l ) i s g o o d wit h a st ro ng “s t o r y”
w h a t w ill be a n u n c e r t a i n
a rou n d f u tu r e rent al g ro wt h in sust a in a ble
Qu a r t e r 3.
lo c ati on s.
5
I NV E S T M E N T Q2 2016
T h e r e s ide n t ia l m a r ke t is pe r f o r m i n g we ll a n d de s pit e a r e du c t io n in t h e h o u s e pr ic e in de x in Q1 t h e t r a je c t o r y of the market remains positive, especially c o n s ide r in g t h e f u n da m e n t a ls o f o u r lo c a l r e s ide n t ia l m a r ke t in r e la t io n t o de m a n d, a n d pr ic e s r e la t ive t o t h e i r pe a k in 2007. A pa r t m e n t
s a le s
in
pa r t ic u la r
are
e n c o u r a gin g, u p 10. 2% o n Q2 20 1 5 a n d a s a r e s u lt t h e r e a r e a n u m be r o f n e w de ve lo pm e n t s m a kin g t h e ir w a y t h r o u gh pla n n in g. A n o t h e r po s it ive f o r o u r m a r ke t is th e number of cranes on the skyline building s t u de n t a c c o m m o da t io n a n d h o t e ls . Mc A le e r a n d R u s h e c o n t in u e t o m a k e gr e a t s t r ide s in t h is r e ga r d wit h 1, 2 0 0 s t u de n t be dr o o m s pla n n e d f o r s it e s a t Mc lin t o c k S t r e e t a n d C o lle ge A ve nu e wh ile B e a n n c h o r ’ s “ B u llit t � is s e t t o o pe n in t h e a u t u m n a n d will f o r m pa r t o f t h e ple t h o r a o f h o t e l de ve lo pm e n t s t o be de live r e d in t h e c it y c e n t r e . While
developers
are
understandably
t a kin g s t o c k f o llo w in g r e c e n t e ve n t s , there
is
no
in dic a t io n
that
the
a s pir a t io n s o r pla n s h a ve c h a n ge d. P la n n in g a pplic a t io n s c o n t in u e t o m a k e t h e ir
way
t h r o u gh
the
pr o c e s s
and
de ve lo pe r s r e m a in c o m m it t e d t o goi n g t o s it e .
6
CU R RE N T L Y O N THE MA R KE T Q2 2016 ASKING PRICE £M
NIY
Open Retail Park
17.0
6.76%
Agreed
Lisnagelvin Shopping Centre
Shopping Centre
17.2
6.9%
Agreed
Tower Centre
Shopping Centre
6.0
10.0%
Available
Foyle Chambers
Office
3.04
7.0%
Available
Iceland Newtownards Road
Retail
1.59
6.25%
Available
Iceland Antrim Road
Retail
1.46
6.25%
Available
Iceland Finaghy Road
Retail
1.275
6.25%
Available
Iceland Shankill Road
Retail
1.135
6.25%
Available
PROPERTY
SECTOR
Downe Retail Park
STATUS
NOTA B LE IN V E STME NT TR ANSAC T IO N S Q2 2016 PROPERTY
SECTOR
£M
NIY
PURCHASER
Avenue House
Office
6.55
10.11%
UK Fund
Lesley Retail Park
Open Retail Park
5
8.38%
Sports Direct
Carleton House
Office
1.975
4.01%
Private Investor *Off market transactions are not included
7
O F F I CE
G R A D E A D E MA ND R E MA I NS S TR O NG
Q2 2016
S U PP L Y L I MI TE D
Th e N I of f i ce market has b uilt o n it s posi ti ve start t o t he y ear in Q 1 a n d e n c ou r agi n g
t ake-up
fig ures
for
Q2
D E VE L O PME NT
s u gge st th at d emand fo r G rad e A s t o c k r em ai n s str ong .
P I PE L I NE U NA B L E TO
We ar e aware o f c. 75,000 sq f t o f
ME E T D E MA ND
s pac e be i n g t aken up , b ring ing t he t o t a l f or th e ye ar to d at e (H1) t o 235,000 s q f t ,
e x pe c t t h is t o c o n t in u e in t h e s h o r t t e r m
which
wit h t h e c u r r e n t de ve lo pm e n t pip e l i n e
is
sig nificant ly
hig her
than
th e sam e perio d (H2) in 2015 w h e n
u n a ble t o m e e t de m a n d.
8 7,5 0 0 sq f t o f act iv it y was reco rd e d. T h is will pu t f u r t h e r u pwa r ds pr e s s u r e o n r e n t s a n d w ill c o n t in u e t o do s o u n t i l
H1 O FF ICE TAKE U P
t h e y r e a c h a le ve l a t wh ic h de ve lo p m e n t be c o m e s via ble .
235,000 SQ FT
A t t h is po in t it is dif f ic u lt t o s e e h o w o f f ic e de ve lo pm e n t w ill c o m e f o r w a r d u n t il u n de r lyin g r e n t s r e a c h ÂŁ 2 0 p s f plu s a n d wh ils t t h e r e a r e s ign s o f t h is ,
lim it e d
e vide n c e
is
a va i l a b l e
a n d w e n e e d t o s e e la r ge r t r a n s a c t i o n s h a ppe n in g.
87,500 SQ FT
No t a ble
r e qu ir e m e n t s
in c lu de
the
B B C wh o a r e s e e kin g 120, 000 s q f t o f Gr a de A s pa c e a n d De lo it t e w h o
2015
2016
r e qu ir e 75, 000 s q f t f o llo win g t h e i r r e c e n t a n n o u n c e m e n t t o e x pa n d t h e i r o pe r a t io n s in No r t h e r n I r e la n d.
A l th ou gh Q2 has seeming ly exp erie n c e d a r e du c e d l e v el o f act iv it y o n Q 1, t h is is
In
the
a bs e n c e
ve r y m u c h a funct io n o f limit ed s u pply
A
stock
r ath e r th an a lack o f d emand and we
are
w it h in
of the
c o n c e n t r a t in g
s u it a ble c it y, t h e ir
Grade Del o i t t e
attention
it is difficult to see how development will come foward until underlying office rents reach £20psf plus. on on e de velo p ment which has ye t t o
R h in o
br e ak gr ou n d , namely Erskine Ho us e o n
L e s le y B u ildin gs , a m ix e d u s e r e t a il of f i c e
C h i c h e ste r St reet and t wo d ev elo pm e n t s
scheme
which
p la n n in g
L a ga n vie w Ho u s e h a s ju s t be e n br o u g h t
a p pr oval i n t hat o f S t arg ime’s p ro po s e d
t o t h e m a r ke t a n d t h is f o r m e r B a n k o f
4
I r e la n d
h ave
Qu e e n s
y et
to
S q uare
receiv e which
is
p la n n in g
8 0,0 0 0 sq f t o n t he fo rmer F irst Trus t B a n k
h a ve on
r e c e n t ly
pu r c h a s e d
F o u n t a in
pr e m is e s
Street,
the while
c o u ld
pr ov i d e
a bo ve
u pc o m i n g
11, 000 s q f t o f s pa c e .
s i te an d ph ase 2 o f M cAleer and R u s h e ’ s B e df or d Square which has t he p ot e n t ia l
In
a ddit io n
to of f e r 2 2 5 ,000 sq ft o f sp ace.
pr o je c t s
to
the
from
K ilm o n a
Ho ld i n g s ,
Mc A le e r & R u s h e a n d S t a r gim e a r e I n th e sh or t term, seco nd ary refurb is h m e n t
s e t t o pr o c e e d o n r e c e ipt o f pla n n i n g
oppor tu n i ti e s hav e t he p o t ent ial t o br idge
c o n s e n t s wh ile Or by I n ve s t m e n t s l o o k
th e gap wh i le t he d ev elo p ment p i pe lin e
s e t t o br e a k gr o u n d s o o n a t E r s k i n e
gath e r s m om ent um.
H o u s e o n C h ic h e s t e r S t r e e t o n Qu e e n s S qu a r e .
N OTA B L E O F F ICE TA KE -UP Q2 2016 OCCUPIER
SIZE (SQ FT)
LOCATION
Citi
16,273
Donegall Square North, Belfast
EY
11,000
Bedford House, Belfast
ARUP
9,000
Bedford House, Belfast
Shopkeep.com
7,800
40 Linenhall Street, Belfast
R E TA IL Q2 2016 Th e r e tai l sect o r co nt inues t o e n jo y a pe r io d o f su stai n e d gro wt h and falling v ac a n c y r a t e s c o u ple d wi th i n c r e ased d emand fo r p rime c it y c e n t r e pit c h e s i s c r e ati n g furt her up ward s p ressu r e in r e n t s .
Re tai l e r s taking sp ace in cit y c e n t r e lo c a t io n s in c lu de Ec c o S h o e s w h o no w oc c u py 1 ,500sq ft in Vict o ria S q u a r e S h o ppin g C e n t r e , P a n do r a ’ s 1, 664 s q f t m e ga stor e at Co rnmarket and G re ggs la t e s t ve n t u r e o n R o ya l A ve n u e .
NOTA B L E RE TA IL T R ANSAC T IO NS
I r e la n d’ s f ir s t dr ive t h r o u gh c o f f ee s h o p . T h e S e a t t le ba s e d f ir m a r e a imi n g t o c o m m e n c e c o n s t r u c t io n in Oc t o b e r a n d c o u ld o pe n be f o r e t h e e n d o f t h e y e a r .
Q2 2016 RETAILER
LOCATION
Specsavers
Victoria Square, Belfast
STA Travel
Victoria Square, Belfast
Ecco
Victoria Square, Belfast
Moss Bros
Castle Lane, Belfast
Patisserie Valerie
Donegal Square West, Belfast
Pandora
Cornmarket, Belfast
Greggs
Royal Avenue, Belfast
Bon Marche
Abbeycentre, Newtownabbey
Jack Jones
Abbeycentre, Newtownabbey
Warren James
Richmond Centre, Derry
Specsavers
Bloomfield Centre, Bangor
E n c ou r agi n gly, we are also s e e in g s i gn i f i c an t transact io ns in o ut o f t o wn lo c ati on s wit h Ho me Barg ains at H ol ywood Exchang e and G o O u t do o r s & Sm yth ’s Toy s at Valley R et ail Park. Th e stor y i s also p o sit iv e fo r o ut of t o w n s h oppi n g c e nt re schemes wit h co n t in u e d inve stm e n t s et t o imp ro v e t he o fferin g t o c on su m e r s. Th e Ki l l u l tag h o wned Co nns w a t e r Sh oppi n g Cent re in east Belfas t h a s r ec e n tl y h ad p lanning g rant ed fo r a n e x pan de d 2 3,000sq ft Lid l st o re wh ile Star bu c k s are also g earing u p t o e n te r th e sc heme b y p ro v id ing No r t h e r n
De s pit e the e c o n o m ic uncertainty dr ive n by J u n e ’ s B r e x it vo t e , d e m a n d f r o m r e t a il o c c u pie r s r e m a in s s t r o n g a n d w h ile c o n s u m e r c o n f ide n c e m a y h a v e f a lt e r e d, it h a s n o t dis a ppe a r e d. W it h a de f ic ie n c y in s u pply we e x p e c t c o n t in u e d r e n t a l gr o wt h w it h in t h is s e c t o r m o vin g f o r wa r d a s r e t a ile r s c o n ti n u e t o vie f o r pr im e pit c h e s o n h igh s t r e et s a n d wit h in t h e po pu la r s c h e m e s .
S US TA I N E D G R OW T H FA L LI N G VACA N C Y UPWARD RENTAL PRESSURES 11
I ND U S T R IA L Q2 2016
Q2 h a s e x pe r ie n c e d a s ign if ic a n t in c r e a s e in u pt a ke o n Q1 w it h s t r o n g de m a nd f o r s pa c e in B e lf a s t a n d m id- U ls t e r .
S TR ON G TRANSAC TION
T h e r e h a ve be e n a n u m be r o f n ot a b l e t r a n s a c t io n s in vo lvin g la r ge r u n it s o v e r
VOL UM E S
50, 000 s q f t wh ic h we did n o t s e e a t a l l
S U STAI N ED DEMAND
Mc Mu lla n
in Q1. f a c a de s
h a ve
le a s e d
c . 96, 000 s q f t . in Po r t a do w n f o r a s t a t e o f t h e a r t m a n u f a c t u r in g f a c ilit y w h i c h
12
B RE XI T MAY STALL Q 2
is t h r e e t im e s t h e s iz e o f t h e ir c u r r e n t
I N VE ST M ENT ACTIV ITY
t h e ir w o r kf o r c e .
pr e m is e s a n d t h is will in t u r n in c re a s e
Q2 has experienced a significant increase in uptake on Q1 with strong demand for space in Belfast and mid-Ulster. Simi l ar i ty, e x pan si on
MJM
G ro up
pl a ns
hav e
wit h
t heir
sig nif ic a n t
Mo vin g f o r w a r d de m a n d r e m a in s h i g h f o r
p ur c h a s e
la r ge r s pa c e a n d we h o pe t o s ee m o r e
of th e f or m e r Shanklet o n Barracks milit a r y ba s e i n B al l yk elly, Co . Lo nd o nd erry wh ic h w ill be u se d f or fit t ing o ut p riv at e jet s .
Moving forward,
I n wh at i s c e r tainly a p o sit iv e mo v e fo r t h e
demand remains
indu str i al m ar ket and a sig n o f ret u r n in g c on f i de n c e ,
S lo efield
Business
Pa r k
high for larger
in
C a r ri c k f e r gu s hav e und ert aken a sp ecula t ive bu ild of 2 u n i ts which will o ffer 10,0 00 s q
space...
f t of spac e i n the aut umn, o ne o f whic h h a s n ow be e n agr e ed . I n addi ti on , we are aware o f a num be r o f
s pe c u la t ive bu ild pr o je c t s t o a d d i n g
indu str i al i n ve s t ment s which hav e rec e n t ly
s o m e m u c h n e e de d s u pply t o w h a t h a s
be e n
be e n a n e n c o u r a gin g qu a r t e r .
agr e e d
and
exp erienced
strong
bid di n g wh i c h has b een a rarit y in t h is s e c tor of l ate .
NOTA B L E IN D U STR IA L TRANSAC T IO N S Q2 2016 OCCUPIER
LOCATION
SIZE
TYPE
Yello
Kilroot Business Park, Carrickfergus
21,000 Sq Ft
Lease
Amazon
Kilroot Business Park, Carrickfergus
28,000 Sq Ft
Lease
McMullan Facades Ltd
McMahon Industrial Estate, Portadown
96,000 Sq Ft
Lease
MJM Group
Shackelton Industrial Estate, Ballykelly
745,000* Sq Ft
Sale *Total Space
THE TEAM Behind the research
14
D E C L A N FL YN N
N I CKY F INNIESTON
DAVID MC NELLIS
M a nag i n g
Director
Director
Director
(Retail & Investment)
(Agency)
A ND R E W GAWL E Y
STE PHEN C HAMB ERS
AOIF E B RENNAN
A s s o ci a t e D i recto r
A ssociate Director
Div isional Dir ector
(Agency)
(Investment & Finance)
(Research Division)
Your Property. Our Business.
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