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QUARTER THREE 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
Q 3 I nv es t ment Tr a nsac ti on s
08
O f fi ce
10
Q 3 O ffi ce Ta k e U p
11
Retail
10
Q 3 R et a i l Tr a ns a ct i on s
13
In dus t r i a l
14
Q 3 I nd us t r i a l Tr a ns ac ti on s T he Tea m B ehi nd T h e Re se arc h
IN T RO DUCTIO N Quarter 3 2016
Fog Lifts As May Arrives P re di c ti on s
S um m e r
P a r t y a n d wit h in 48 h o u r s Mr Ca m e r o n
a b ou n de d at t he clo se o f Q uart er 2 wit h
t e n de r e d h is r e s ign a t io n m a kin g he r t h e
m an y an ti c i p at ing t he p re-Brexit pa u s e
U K ’ s s e c o n d f e m a le P r im e Min is t e r.
in
of
tr an sac tio nal
an
uncert ain
inv est ment
a c t ivit y
w ou l d pr e vail t hro ug ho ut Q uart er 3.
T h e e f f e c t o f t h is s t r o n g h a n d t a k i n g t h e po s t B r e x it t ille r w a s a n a ir o f i n i t i a l
Th e
i n i ti al
uncert aint y
the
c o n f ide n c e c o m in g ba c k t o t h e m a r k e t s
id e n ti ty of D av id Camero n’s p red ece s s o r ,
a n d t h is m a r ke d t h e c o m m e n c e m e n t o f
pr e di c te d to t ake o ffice in S ep t e m be r
Ma y’ s s o c a lle d “ s e n s ible a n d or d e r l y ”
2 01 6 , di d l i tt le t o b o lst er much n e e de d
de pa r t u r e f r o m t h e E U t h a t in vo lv e d t h e
c on f i de n c e
the
t r igge r in g o f A r t ic le 50 o f t h e L i s b o n
s tar t of Qu art er 3 g av e many cau s e f o r
Tr e a t y be in g po s t po n e d t o 2017 a t t h e
c on c e r n th at a S ummer o f d isco nt en t w a s
e a r lie s t .
and
t he
reg ard ing
climat e
at
imm i n e n t. A u gu s t pr o ve d t o be a m o n t h o f s e t t l i n g Th e n ati on s eemed t o b reat h a s ign o f
du s t w it h bu s in e s s e s , in ve s t o r s a n d t h e
r el i e f on 1 1t h July when T heresa Ma y
n a t io n a s a wh o le t a kin g s t o c k d u r i n g
be c am e l e ader o f t he Co nserv at iv e
pa r lia m e n t s S u m m e r r e c e s s a n d. . . a s t h e (Continued on page 5)
I NV E S T M E N T Q3 2016
T R A N SAC TIONAL
Caution Reigns F o llo w in g o n f r o m t h e pr e a nd p o s t
ACT IVITY LOW
B r e x it lu ll in in ve s t m e n t a c t iv i t y t h e w h e e ls o f t h e NI m a r ke t h a ve s l o w l y
CAUT I ON PREVAILIN G
be gu n t o t u r n a n d t h e a ppe ti t e f o r h igh e r
qu a lit y
assets,
pr ic e d
to
r e f le c t o n go in g r is ks , r e m a in s s t r o n g de s pit e c o n t in u e d u n c e r t a in t y.
I M PL ICATIONS AS STERLING VALUE FALLS
I n ve s t m e n t
t r a n s a c t io n
vo lu m e s
for
Q3 we r e do w n c o n s ide r a bly f r om o u r e s t im a t e s a t t h e be gin n in g o f t h e y e a r w it h o n ly £ 45m h a vin g t r a n s a c t e d .
YIELDS
SUPPLY
DEMAND
T h e r e is a f u r t h e r £ 36m c u r r e n t ly o n t h e m a r ke t in c lu din g t h e Ma n s f o r d o w n e d S t r a ba n e S h o ppin g P a r k a n d La h a r n a R e t a il P a r k h o we ve r w e a r e e x p e c t i n g
... to se e a n u mb er o f sig nificant asset s c o m in g to th e m ar k et o r b eing re-market e d o ve r t h e com i n g m on ths. W h i l st th e majo r t ransact io ns in Q3 w e r e a c qu i r e d by lo cal inv est o rs, t he m a r ke t in G B i s be i n g d riv en b y fo reig n inv e s t o r s wh o a r e be i n g att ract ed b y t he weak po u n d a n d p e r c e i ve d di sco unt av ailab le fo r g o o d qu a lit y a sse ts. We w o uld exp ect t o see t hes e in ve s t o r s
F og Lif ts As M ay Arrives ( Continued from page 3)
tak i n g a f r e sh lo o k at o ur market shou ld we , a s ex pe c te d, see a numb er o f g o o d q ua lit y a s s e t s com i n g to th e market in Q 1 2017.
The most notable transaction in Q3 was by the MJM Group who purchased Damolly Retail Park in Newry... 48.1% 51.9%
...as
po lit ic ia n s
after
t h e ir
reconvened
br e a k
t he
Brexit
s t o r m c lo u ds s t a r t e d t o c l e a r i n No r t h e r n I r e la n d. A t a n gible B r e x it bo u n c e w a s r e po r t e d a lo n g t h e bor d e r d u e t o t h e lo w va lu e o f th e p o u n d lit e r a lly
dr ivin g
co n s u m e r s
No r t h in s e a r c h o f v a l u e a n d a s t h e qu a r t e r dr e w t o c l o s e t h is
u n a n t ic ipa t e d
boon
for
t h e pr o vin c e s bo r de r r e t a i l e r s m ir r o r e d t e n t a t ive pos i t i v i t y i n t h e c o m m e r c ia l pr o pe rt y m a r k e t . T h o u gh c a u t io n s t ill p r e v a i l s , du e t o u n de r lyin g c o n c e r n s o v e r
Recent
r e search
fro m
that
S t erling
s ugge sts
O xfo rd has
E c o n o m ic s
t h e s t r e n gt h o f t h e e c o n o m y,
h is t o r ic a lly
the
return
of
t r a ns a c t i o n a l
t e r r it o r y
a c t ivit y h a s pr o vide d c o m f o r t
1996- 97,
t h a t t h e pr e a n d po s t B r e x i t l u l l
2 0 0 9 - 1 1 an d 2013-15 so wit h t his in m in d,
did n o t h e r a ld a r e pea t o f t h e
the ti m i n g co uld b e rig ht fo r a n u m be r o f
c r is is w it n e s s e d in 20 0 7 / 2 0 0 8 .
r al l i e d over
str ong ly th e
past
fro m 25
und erv alued y ears,
in
p ote n ti al e n t rant s t o o ur market . T he
m ost
no t ab le
t ransact io n
in
Q3
wa s
b y th e MJM G ro up who p urchase d Da m o lly R e tai l Par k i n Newry fo r ÂŁ 30.72m. re f le c t in g a NIY of 7 .4 % .
5
I NV E S T M E N T Q3 2016 Th e f u n dam ent als o f inv est ing in lo c a l
r a t e s /bo n d
c om m e r c i al
ro b u s t ,
c o m m e r c ia l pr o pe r t y in ve s t m e n t w i l l
u n de r l i n e d by a g o o d o ccup at io nal s t o r y
c o n t in u e t o be ve r y a t t r a c t ive , e v e n
a cr oss
wit h t h e c u r r e n t u n c e r t a in t y.
p ro p ert y
al l
c on ti n u e s
sect o rs. to
fall
remain R et ail
while
v aca n c y
o ffice
r e m a in
high
rents
c on ti n u e to gro w o n t he b ack o f st r o n g
L o o kin g f o r w a r d we e x pe c t t o s e e
indi ge n ou s d emand and limit ed su pply
in ve s t m e n t
E ve n ou r i n d ust rial market is sho win g
2017 w it h in ve s t o r s pr o c e e din g w i t h
s i gn s of i m pro v ement wit h d ev elo pe r s
c a u t io n . I f a s s e t s a r e pr ic e d c o r re c t l y
n ow l ook i n g at b uild ing new shed s t o
we w ill u n do u bt e dly s e e s a le s vo lum e s
s ati sf y de m and .
in c r e a s in g.
I n e sse n c e whilst t he g ap b et w e e n c om m e r c i al pro p ert y y ield s and int er e s t
6
yie lds
vo lu m e s
im pr o ve
in
Q1
C UR RE N T LY O N THE MA R KE T Q2 2016 ASKING PRICE £M
NIY
STATUS
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
1.28
6.25%
Available
Iceland, Shankhill Road
Retail
1.14
6.25%
Available
Laharna Retail Park
Open Retail Park
5.78
8.0%
Available
Strabane Shopping Park
Open Retail Park
3.29
8.0%
Available
Currys/PC World Sprucefield
Retail
14.0
7.7%
Available
Waterside Tower & North Tower
Office
4.50
6.69%
Available
PROPERTY
SECTOR
Foyle Chambers
N OTA B LE IN V E STME NT T RA N SAC T IO NS Q3 2016 PROPERTY
SECTOR
£M
NIY
PURCHASER
Damolly Retail Park
Open Retail Park
30.72
7.4%
MJM Group
Tower Centre
Shopping Centre
6.5
8%
Local Investor
Lesley Buildings
Office
8.0
-
Private Investor *Off market transactions are not included
7
OFFICE Q3 2016 Th e N I of f i ce market co nt inues t o
T h e t o n e o f t h e o f f ic e m a r ke t h a s
pe r f or m we l l wit h d emand fo r G rad e A
s e e n lit t le c h a n ge in r e c e n t m o n t hs
s pac e r e m ai ning st ro ng .
w it h de m a n d c o n t in u in g t o o u t s t ri p s u pply.
Ta k e u p i n Q3 amo unt ed t o 78,000 s q f t wh i c h is up slig ht ly o n t h e
The only significant speculative office
pr e vi ou s qu art er when 75,000 sq f t
building under construction at the
w as r e c or de d and b ring s t he t o t al f o r
moment is CQ2 which will provide
th e ye ar to 3 13,000sq ft .
just over 90,000 sq ft of Grade A accommodation in Clarendon Dock.
We u n de r stand t hat t he land lo rd ha s
ligh t f o r ph a s e 2 o f B e df o r d S qu a r e .
a g r e e d te r m s o n all b ut t wo flo o r s
T h e la t t e r w ill in c lu de t h e r e f u r bis hm e n t
a nd th at th e y are achiev ing head lin e
o f t h e lis t e d W illia m Ew a r t bu ildin g a n d
r en ts of £2 0 p sf wit h v ary ing rent fre e
c o u ld de live r 215, 000s q f t o f s pa c e .
inc e n ti ve s
b eing
g iv en
to
the A lt h o u gh t h e s e de ve lo pm e n t s m a y w e l l
pr ospe c ti ve tenant s.
a lle via t e
the
s u pply
ga p
in
the
Si m i l ar l y i n the Cit y Cent re t here are a
m e diu m t e r m it is dif f ic u lt t o s e e h o w
n u m be r of tr ansact io ns which hav e n o t
de m a n d w ill be m e t in t h e s h o r t t e r m a n d
c om pl e te d as y et wit h head line ren t s
t h is will pla c e e ve n m o r e im po r t a n c e o n
of be twe e n £ 20 and £ 22p sf.
r e f u r bis h m e n t pr o je c t s .
HEADLINE R E NTS 20 12- 20 17 £23.00 £22.00 £21.00 £19.00
£20.00 £19.00 £18.00 £17.00
£15.50
£17.00
£16.00 £15.00 £14.00 £13.00
£12.50
£12.50
2012
2013
£13.00
Q3
£12.00 £11.00 2014
2015
2016
2017
On th e su ppl y sid e v ario us sp eculat ive de ve l opm e n ts co nt inue t o make t he ir w ay
th r ou gh
t he
p lanning
sy st em ,
two n otabl e schemes hav e recen t ly
STRONG DEMAND O UT S R I P P I N G S U P P LY
be e n gr an te d ap p ro v al and co uld go s om e way to meet ing t he sig nifica n t ou tstan di n g req uirement . K il m on a
Ho ld ing s
hav e
o b t ain e d
HEADLINE RENTS REACH £20PSF
pl an n i n g pe rmissio n fo r t heir sit e o n E ast B r i dge S t reet which has t h e pote n ti al to o ffer 230,000 sq ft o f Gr ade A sp ace, and M cAleer a n d Ru sh e h ave a lso b een g iv en t he g ree n
RENTS
Y IELDS
S U PPLY
DEMAND
O F F I CE Q3 2016
OW N E R OCC U PATIO N A s r e n tal l e vels co nt inue t o
p lay c a t c h
C o n c e n t r ix a n d w ill de live r 66, 000 s q f t
u p wi th c ost s t he sup p ly o f G rade A
of
s pac e r e m ai ns co nsid erab ly hind ered.
Ma ys f ie ld L e is u r e C e n t r e wh ic h w i l l form
Th e r e su l ti n g lack o f ap p ro p riat e s pa c e
o f f ic e pa r t
s pa c e of
a
at ÂŁ 36m
the
f o rm e r
in ve s t m e n t
by t h e bu s in e s s s e r vic e s f ir m .
is l e avi n g so me larg er o ccup iers w it h n o und e r t a ke
S im ila r ly, A lls t a t e h a ve be e n gr a n t e d
th e i r own desig n and b uild p ro je c t s t o
pla n n in g pe r m is s io n a n d a r e o n s it e o n
m e e t th e i r r e q uirement s.
a n a dja c e n t s it e a n d h o pe t o pr o v i d e
c h oi c e bu t to g o it alo ne and
115, 000s q f t o f s pa c e a s t h e y m o v e C on tr ac tor s
O ’Hare
and
M cG o ve r n
t h e ir o pe r a t io n s f r o m L a n yo n P la c e.
h ave gon e to sit e o n t he inst ruct io n s o f
NOTA B L E O F F ICE TA KE -UP Q3 2016 OCCUPIER Tourism NI
10
SIZE (SQ FT) LOCATION 17,649
LOCATION Floors 10-12, Linum Chambers, Bedford Street
Regus
17,400
4th & 5th Floor, Lincoln Building, Great Victoria Street
Pearson Management Services
15,396
1st Floor, Millennium House, Great Victoria Street
Speechstorm Ltd
5,305
8th Floor, The Linenhall, 32-38 Linenhall Street
RE TA IL Q3 2016
U P WA R D PR E S S U R E O N R E NTS FA L L I NG VACA NC Y
Th e r e tai l land scap e co nt inues t o impr ove de sp it e t he Brexit v o t e wit h f al l i n g vac ancy rat es in Belfast c it y centre placing further upwards pressure on r e n ts wi th Zo ne A no w t rend ing a t ÂŁ1 2 5 psf f or prime cit y cent re p it che s . Th e r e tai l story has b een b uo y ed furt h e r by a de val ued p o und enco urag i n g s h oppe r s f r om t he R ep ub lic t o v ent ur e n or th .
ZO NE A R E NTS TR E ND I NG AT ÂŁ125 PSF RENTS
Y IELDS
S U PPLY
DEMAND
B or de r town s in p art icular hav e seen a n u ptu r n i n f oo t fall and sp end in rece n t m on th s an d this is set t o co nt inue f o r th e sh or t te r m at least . N e wr y, D e r r y, S t rab ane and Enniskill e n h ave al l se en increased numb ers o f s h oppe r s c o ming no rt h. Erneside Sh oppi n g C ent re in Enniskillen ha s r ec or de d i n c reased fo o t fall o f aro un d 1 0% i n Ju l y and Aug ust co mp ared t o th e sam e m o nt hs last y ear, wit h 80% of r e tai l e r s reco rd ing sales g ro wt h o f be twe e n 4 % - 40%.
11
N OTA B L E RE TA IL TR A NSACTIO NS Q3 2016
12
RETAILER
LOCATION
Stradivarius
Castle Lane, Belfast
Greggs
Castle Lane, Belfast
Kiko Milano
Arthur Street, Belfast
The Entertainer
Castle Court, Belfast
Sostrene Grene
Ann Street, Belfast
Shuropody
Ann Street, Belfast
Studio Souk
Ann Street, Belfast
Holland & Barrett
Forestside SC, Belfast
Argento
Forestside SC, Belfast
Swarovski
Foyleside SC, Derry
B&M
Ards Shopping Centre, N’Ards
TK Maxx
Ards Shopping Centre, N’Ards
JD Sports
Ards Shopping Centre, N’Ards
Superdry
The Quays SC, Newry
The Range
Braidwater Retail Pk, Ballymena
B e lf a s t h a s s e e n a n u m be r o f n e w retailers opening stores with Stardivarius, T h e E n t e r t a in e r , K iko Mila n o a n d Da n i s h in t e r io r s r e t a ile r S o s t r e n e Gr e n e s h o r t l y t o o pe n w it h 6 m o r e pla n n e d t h r o u g h o u t t h e P r o vin c e . Ou t s ide o f B e lf a s t w e h a ve s e e n m u lt iple de a ls r e - in vigo r a t in g A r d s S h o ppin g C e n t r e in Ne wt o w n a r ds w i t h J D, T K Ma x x a n d B & M a ll c o m m i t t i n g t o t h e s c h e m e . T h e de a l wit h T K M a x x is t h e ir f ir s t n e w s t o r e in NI fo r a n u m be r o f ye a r s w h ic h will s o o n b e f o llo we d by t h e ir n e w s t o r e a t t h e r e de ve lo pe d L a ga n ba n k R e t a il P a r k in L is bu r n . A n d in Ne wr y S u pe r d r y h a ve o pe n e d t h e ir f ir s t s t o r e o u t s i d e o f B e lf a s t in T h e Qu a ys , wh ic h is c u r r e n t l y de ve lo pin g o u t it s t h ir d ph a s e w i t h 100, 000s q f t o f n e w r e t a il s pa c e . L o o kin g f o r wa r d we see rents in c r e a s in g wit h c o m pe t it ive t e ns i o n f o r s pa c e a lr e a dy a ppa r e n t in B el f a s t . A c r o s s t h e P r o vin c e we e x pe c t t o s e e va c a n c y r a t e s dr o ppin g a n d do mi n a n t s c h e m e s a n d h igh s t r e e t s s t a r t in g t o f i l l u p wit h t h e n e w e n t r a n t s t o o u r m a r k e t r o llin g o u t s t o r e s .
I ND U S T R IA L Q3 2016 Q u ar te r th r e e no t o nly includ ed th e
A r e c e n t in ve s t m e n t s a le in De r r y l o r a n
q u i e te r
t h is
I n du s t r ia l E s t a t e , C o o ks t o w n c o m pr i s i n g
y e ar was al s o effect ed b y t he Bre x it
80, 529 s q f t a ls o a c h ie ve d s t r o n g le v e l s
d e c i si on . A s a result o f b o t h t ake u p
of
a n d de m an d fell when co mp ared w it h
in ve s t o r s
the f i r st two q uart ers o f t he y e a r .
in du s t r ia l s e c t o r t h a t a f e w ye a r s a go t h e y
Wh i l e th e m ajo rit y o f b usinesses have
w o u ld n e ve r h a ve c o n s ide r e d.
su mmer
mo nt hs,
b ut
in t e r e s t
and
we
gr a du a lly
are
now
m o vin g
s ee i n g
in t o
the
d e l aye d m aking d ecisio ns and ha ve ta k e n a c au ti o us o ut lo o k d ue t o Bre x it
A n in du s t r ia l e s t a t e a t Dr u m a h o e , L a r n e
a n u m be r of manufact uring co mp an ie s
c o m pr is in g c . 63, 000 s q f t h a s r e ce n t l y
in th e e x por t b usiness hav e rep o rte d
c o m e t o t h e m a r ke t o n a f o r s a le b a s i s
in c r e ase s sales d ue t o t he weakenin g
a n d a la r ge in du s t r ia l bu ildin g c o m pr i s i n g
o f th e pou n d.
c.
176, 900
sq
ft
has
come
to
the
m a r ke t t o le a s e in S h o r e B u s in e s s P a r k , T he r e
h ave
tr an sac ti on s
b een in
a
Q3
numb er
of
includ ing
C a r r ic kf e r gu s .
the
for m e r pl asti cs cent re o n S carv a R o a d,
L o o kin g t o w a r ds Q4, o w n e r o c c u p i e r s
Ban br i dge ; co mp rising c. 52,880 s q
a r e s t ill a c t ive a n d lo o kin g t o pu r ch a s e
ft, 1 Tr e n c h Ro ad , M allus; co mp risin g
e x is t in g bu ildin gs plu s a r e c e n t s u r g e
c. 3 3 ,5 4 6 sq ft and t he wareho us e
in in t e r e s t f r o m t h e le is u r e s e c t o r c o u l d
& of f i c e pr e mises o n Carnb ane Wa y,
t a ke u p s u pply a n d pr o vide po t e n t i a l
Ne wr y; c om p rising c. 29,004 sq f t .
a lt e r n a t ive u s e s .
T he se tr an sact io ns sho w a t rend o f o wn e r - oc c u piers b eing t he d o min a n t for c e i n th e market p resent ly. T he
current
sho rt ag e
of
mo d e r n
DEMAND REMAINS F O R Q UA LI T Y U N I T S
w ar e h ou se u nit s g reat er t han 20,0 00 sq
f t,
loadi n g,
e specially is
wit h
seeing
a
d o ck
le ve l
numb er
of
landlords refurbishing existing units and
LEISURE SECTOR WORTH WATCHING
con si de r i n g inst alling d o ck lev elle r s to sati sf y th is d emand . Po rt ad o wn in p ar ti c u l ar still has limit ed av ailab ilit y w i th a n u m ber o f liv e req uirement s no t b e i n g abl e to b e sat isfied .
RENTS
Y IELDS
S U PPLY
DEMAN D
N OTA B L E IN D U STR IA L T RA N SAC T IO NS Q3 2016 LOCATION
SIZE
TYPE
Channel Business Park, Belfast
10,000 Sq Ft
Lease
Scarva Road, Banbridge
52,880 Sq Ft
Sale
Ferguson Drive, Lisburn
16,081 Sq Ft
Sale
Derryloran Industrial Estate, Cookstown
80,529 Sq Ft
Sale
Trench Road, Mallusk
33,546 Sq Ft
Sale
Carnbane Way, Newry
29,004 Sq Ft
Sale
THE TEAM Behind the research
NIC K Y F IN N IE S TON
DAVID M CN E L L IS
M ana g in g
Direc to r
Direc to r
D i rector
(Retail & Investment)
(Agency)
A NDR EW G AWLEY
STE P H E N C H AM B E RS
AOIF E B RE N N A N
DEC L A N FLYNN
Associ at e D ire cto r
Asso c ia te Direc to r
Direc to r
( A g ency)
(Investment & Finance)
(Research)
Your Property. Our Business.
LISNEY NORTHERN IRELAND 1st Floor Montgomery House 29-33 Montgomery Street, Belfast, BT1 4NX 028 9050 1501 belfast@lisney.com
www.lisney.com