Commercial property demand up in UK as supply falls

InternalDemand from business for commercial property in the UK rose for the eleventh consecutive quarter, while available space fell for the ninth successive period, the latest sector market survey report shows.

The Royal Institution of Chartered Surveyors (RICS) says that as a result, rents are expected to rise at the fastest pace since its survey began in 1998 with 46% more respondents forecasting higher, rather than lower, rent rates going forward.

Offices remain the segment of the market where rental expectations remain most buoyant, while retail continues to lag although even in this area, momentum is picking up, while prices are expected to keep rising over the next 12 months.

The picture is not dissimilar in the investment market, where purchase enquiries rose again; 53% more surveyors reported an increase in prospective investors over the quarter.

Meanwhile, availability continues to decline, exerting further upward pressure on capital values. There were also reports of greater overseas buyer interest, with 36% more respondents seeing more enquiries from overseas investors.

Across the whole of the UK, but excluding London, 95% of respondents believe that current commercial market valuations are either at or below fair value, this is roughly unchanged since the first quarter of 2015. However, in London 50% of contributors now feel that commercial property valuations are ‘expensive’, an increase from 45% in the first quarter.

RICS says it was interesting that given the upcoming referendum on the UK’s position in the European Union, when asked if Britain leaving the EU would have significant negative implications for the commercial property market, 44% of respondents felt it would, while 32% believed it would not. Reflecting the high degree of uncertainty, 24% reported they did not know at this point.

‘The results of the latest survey suggest the price of commercial real estate will continue to move higher over the next 12 months and quite possibly by another 10%,’ said Simon Rubinsohn, RICS chief economist .

‘Fortunately, the strength of the occupier market is providing some underlying support for the market. Indeed, the feedback we are getting from around the country tells us that the economic expansion is continuing to broaden out with both tenant demand, and just as significantly, investor interest, rising in all areas,’ he added.

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Warning sounded as the commercial property market struggles to keep up with demand

JS12991379The market has really started to motor along, evidenced by a very much higher volume of enquiries now being received. We saw a doubling of enquiry numbers between 2013 & 2014 and enquiries are on course to double again in 2015.

Enquiries Struggling
We have a number of enquiries that are really struggling to find commercial property to suit their needs. Demand is such that there is now a serious shortage of stock on the market, particularly on a freehold basis. This makes searching for a new premises an even more time consuming exercise when most business owners and decision makers would prefer to devote time to the business, not the irritating diversion of looking for new premises.
This is where turning to Wiggins Lockett Thompson can make sense. We offer a search and acquisition service to take the leg work away from our client, leaving them to the day to day running of their business. Our Surveyors take a personal approach to business and keep our clients updated along the way. We utilise our years of experience and market contacts to dig out the opportunities for our clients to consider.

Corporate Support Service
WLT offer an all-round package of commercial services and advice in-house. Our Corporate Support Services are utilised by clients across the region from the full all-encompassing service to bespoke services relating to specific matters.  We provide what essentially amounts to a Property Director role in companies that need them.  Expertise is available as and when needed with “property updates” provided to client keeping them ahead of the trends, important dates and responsibilities.  This is vital information for company boards and business owners.

The Current Situation
The lack of available properties on the market of course means that, marketed properly, a relatively short marketing period is required. We have current live enquiries for industrial premises from 1,000 sq ft to 20,000 sq ft and are therefore very keen to talk to property owners across the Black Country.  The situation is such that commercial leases are being re-geared and renegotiated mid-term.
Recent transactions we’ve been involved in include the freehold industrial acquisition of 57,000 sq ft in Dudley, letting of office space in Stourbridge, Wolverhampton and Gailey.  Solicitors are being kept very busy and on their toes.
Clients of Wiggins Lockett Thompson, Denby Developments commented,
“I have been thoroughly impressed with the level of service Richard and the team have provided to us from initial marketing through to negotiations and completion.

Commercial Premises Available In The Gorge

weschapelexteriorWiggins Lockett Thompson, in a continuing instruction received from the Ironbridge Gorge Museum Trust and other private investors in the area, have been asked to market and find new occupants for several existing period buildings in the Ironbridge Gorge World Heritage Site.

The buildings, all offices, are all occupation-ready being primarily and most significantly the former Wesleyan Chapel in Coalbrookdale, the first floor offices in the same building as Nick Tart overlooking the roundabout in Ironbridge and the building known as the Mosaic Shop which is located within the Tile Museum premises in Jackfield.

The Wesleyan Chapel comprises a substantial open plan office at first floor level with archive/workshop at lower ground floor level and is available on flexible terms and rent immediately.  The premises provide an imposing and unique commercial property opportunity for the right business in the area.

14-16 High Street, IronbridgeThe first floor offices at High Street, Ironbridge which are shortly due for renovation form part of a privately owned commercial premises occupied by Estate Agents Nick Tart and Wenlock Health & Safety at second floor.  The premises are sub-divided into a number of small offices and are suitable for the majority of administrative users and have easy access to the facilities in Ironbridge.

Mosaic Shop, JackfieldThe Mosaic Shop premises in Jackfield are available for Art & Craft and Creative occupiers having previously been occupied by a Marketing company and Sound Studio.

Anthony Wiggins already reports strong interest in the former Sound Studio premises and there is a small standalone office known as the West Wing immediately available for occupation.  Anthony Wiggins added ‘The quality of working environment in The Gorge in Telford is second to none.  We are delighted at the success we have had in letting commercial space in this area in the past and are pleased to be able to provide further opportunities for Telford businesses.’

For further information or to arrange a viewing, please contact Anthony Wiggins on 01952 603303.

Court throws out Shell Centre challenge

39049pkThe court of appeal has dismissed the legal challenge put against the £1.2bn Shell Centre scheme, meaning development of the plan is likely to finally get under way.

Lat year the Government approved the 1.45m sq metre Shell Centre development plans.

Then Communities Secretary Eric Pickles MP gave the go ahead to the redevelopment of the Shell Centre on the South Bank.

The plans had first won approval from Lambeth Council and Mayor Boris Johnson back in May 2013, but Pickles then called in the plans, citing concerns about the impact of the redevelopment around Westminster, a world heritage site.

A public inquiry was held, which was then later given the go-ahead.

But the plans were then taken to the court of appeal by a group of activists, which have now been dismissed.

A spokesperson for Braeburn Estates, the joint venture between developers Canary Wharf Group and Qatari Diar, said:
“We are pleased that the appeal against our proposed redevelopment of the Shell Centre has been dismissed. It had already been through an exhaustive planning process and we now look forward to commencing works on site in the near future and, in so doing, to bringing many benefits and much regeneration to this important part of London.”

The plans are for a set of offices, apartments, shops and restaurants in eight buildings that would sit around the existing 27-storey 107 metre tall Shell Centre, covering some 1.45 million sq ft.

In total, the development will be split with 800,000 sq ft of offices, 80,000 sq ft new shops and restaurants, and around 600,000 sq ft of residential space, making around 900 flats.

In July 2011 Shell announced that a joint venture of Canary Wharf Group and Qatari Diar had bought a virtual freehold (a 999-year lease) on the Shell Centre for £300m and would redevelop the site.

Savills completes Smiths Gore acquisition

38923pkAs first reported by on 21st April 2015, Savills yesterday completed the acquisition of Smiths Gore.

Smiths Gore is a long established partnership providing rural property services in the UK. The business will be integrated into Savills existing national network and will ultimately trade under the Savills brand.

Founded in 1847, Smiths Gore has operated as a partnership with 532 staff, across 31 UK offices and 14 estate offices, all of whom will transfer into Savills Rural Energy and Projects (REP) division or its Country Residential Agency business. Smiths Gore specialises in the management of rural property for private clients, institutions and the public sector. This complements Savills UK’s existing rural business which is mainly focused on private client and charitable sectors together with transactional advice.

Savills UK Executive Director Philip Gready will continue to lead the UK REP division with Smiths Gore’s Senior Partner Andrew Harle joining the Savills UK Board. Philip, who first joined Savills in 1982, took on his present divisional head role in January 2010. He specialises in advising private and corporate landowners in the management of their landholdings throughout the South of England and has become increasingly involved in the renewable energy sector. Andrew Harle joined Smiths Gore in 1987 and was elected Senior Partner in 2014. He holds a number of senior roles acting on behalf of institutional, charity and private clients in the rural sector as well as a number of trusteeships and directorships on behalf of clients.

Last remaining office at Pendeford Place

first floor office at 4 Pendeford PlaceHot on the heels of letting the ground floor at 4 Pendeford Place, Wiggins Lockett Thompson are now seeking a new tenant for the first floor accommodation.  Situated on the popular Pendeford Business Park the suite comprises 1,088 sq ft with car parking is offered at an asking rent of £13,000 per annum.

Enquiries should contact Wiggins Lockett Thompson on 01902 229550.

TfL heads east as signs 265,000 sq ft office pre-let at the Olympic Park

The new TfL home at the International Quarter in the Queen Elizabeth Olympic Park, Stratford E20.Transport for London (TfL) has signed a 265,000 sq ft pre-let at The International Quarter in the Queen Elizabeth Olympic Park.

The huge Agreement for Lease signed at Stratford E20, will see TfL open its third major London office, in addition to Palestra in Southwark and Pier Walk in North Greenwich called.

The International Quarter is the new commercial district on the site of the Queen Elizabeth Olympic Park and is being delivered by partners Lend Lease and London & Continental Railways (LCR). It is expected that occupation of the new building will begin from Autumn 2017, with a decision on which TfL teams will occupy the space to be confirmed at a later stage.

The 265,000 square foot building which will be located on Plot S6, adjacent to the London Aquatics Centre and the Westfield Stratford City shopping centre.

The site has excellent transport links with the Jubilee line, Central Line, London Overground, National Rail, Southeastern High Speed and DLR serving Stratford and Stratford International stations in addition to the area’s extensive bus connections. The Jubilee line provides a direct connection with TfL’s existing accommodation hubs at Palestra in Southwark and Pier Walk in North Greenwich. When Crossrail services to the area begin in Spring 2019, it will further enhance Stratford’s transport links especially to central and west London, Heathrow and beyond.

Steve Allen, Managing Director of Finance at TfL, said: “We are consolidating our office accommodation into a smaller number of larger buildings. The International Quarter in Stratford provides the ideal opportunity for us to make further progress with its excellent transport links while enabling us to achieve significant savings.”

The International Quarter is one of Europe’s largest mixed-use developments and is delivering, post the 2012 Olympic and Paralympic Games, major benefits to the local and wider London economy. Lend Lease and LCR obtained detailed planning permission for the new TfL office building in March 2015, with construction set to begin imminently.

Dan Labbad, Chief Executive Officer, International Operations at Lend Lease, said: “Securing TfL as a major pre-let marks the emergence of a new generation of offices in East London that will make a lasting contribution to the local economy. Drawing on Lend Lease’s international experience and working in partnership with LCR, our ambition is to create the most agile, healthy and efficient workplaces in the capital.”

David Joy, LCR’s Chief Executive, said: “This is yet another huge vote of confidence in Stratford and The International Quarter. The momentum is really building behind this new part of London and between the Financial Conduct Authority and TfL and those that follow, this will be a really vibrant place to work and a world class commercial centre.”

HSBC HQ move decision to take months not years

HSBC HQ at the Canary Wharf Tower. Photo by Gordon JolyHSBC chief executive Stuart Gulliver said their decision whether to move their headquarters out of London will “take us a few months, not years.”

However, the bank said that only 250 jobs out of 48,000 UK-based HSBC employees would be transferred if the headquarters were to be relocated. reported last month on April 24th that HSBC were considering moving their HQ away from London and out of the UK. also reported in March that HSBC is to relocate the national head office of its ring-fenced retail banking division from London to Birmingham city centre.

HSBC is in advanced negotiations to conclude the acquisition of a 250 year lease on a new office comprising 210,000 sq ft at Miller Development’s Arena Central.

As part of the broader strategic review taking place, the Board of HSBC has now asked management to commence work to look at where the best place is for HSBC to be headquartered globally.

It cited the economic uncertainty that stands out of UK exiting membership of the EU.

In February the bank published a major research study which concluded that working to complete the Single Market in services and reforming the EU to make it more competitive were far less risky than going it alone, given the importance of EU markets to British trade.

The bank also cited a number of positive developments in overseas markets.

London is rapidly losing its competitive edge as cripplingly high housing and spending costs, together with easier global transport, means it is far cheaper and easier for companies to have their staff working from international offices remotely.

HSBC has also faced accusations of foreign exchange manipulation and assisting in tax avoidance, which “has undoubtedly done reputational damage to the firm”, said CEO Stuart Gulliver.

General – UK, Sainsburys takes £0.9bn property write-down

Sainsbury'sProperty values at UK supermarket Sainsbury’s have decreased during the past year by £0.9 billion to £11.1 billion, mainly due to a reduction in market rental values.

The write-down comes two weeks after reported that Tesco had taken a £4.7 billion impairment charge on its property portfolio.

As a result of the review of Sainsbury’s supermarket estate, it now has taken an impairment charge against some of its trading stores and withdrawn from a number of schemes in the property pipeline that are unlikely to achieve an appropriate return on capital.

During this financial year Sainsbury’s opened eight supermarkets (of which two were replacement stores), extended five, refurbished 13, and closed one.

Sainsbury’s will add only around 450,000 square feet of new space in each of the next two financial years, predominantly focused on convenience stores.

Tesco’s property review has also led it to exit plans to build out 49 stores and a significant reduction to its store building programme.

Despite a £0.9 billion decline in its property valuation, Sainsbury’s said it will aim to maximise the value of their property assets by working with joint venture partners to deliver new leisure, residential and commercial opportunities whilst adding trading space to its estate.

The supermarket is delivering over 1,500 new homes across London. Their £500 million project with Barratt London at Nine Elms will complement the new tube station development and will open in 2016/17. It will deliver 737 new homes, a new Sainsbury’s store and 27,000 square feet of local shops, restaurants and office space. There are also plans for a replacement store at Whitechapel Square in Tower Hamlets alongside 600 new homes and improved public space surrounding Whitechapel Station. Mixed use development schemes are expected to deliver property profits of around £200 million in the next two years.

City of London, 21 Lombard Street in the City of London bought for £130m

21 Lombard Street, City of LondonIvanhoé Cambridge has acquired 21 Lombard Street, an office property located in the City of London, from an undisclosed seller for approximately £130 million (gross).

21 Lombard Street is a prestigious Class A core asset, offering 116,000 ft2 (10,775 m2) of leasable space. The property is leased entirely to a large international bank for the long term, thought to be UBS, though floors are available on subleases expiring December 2026.

“We are very proud of this acquisition, our third office property in the City of London in less than six months,” said Meka Brunel, Executive Vice President, Europe, Ivanhoé Cambridge. “We remain focused on a clear investment strategy of building a critical mass of quality office assets in London, alongside our partner Greycoat.”

DTZ represented the seller in the transaction, while Greycoat and Knight Frank acted for Ivanhoé Cambridge.