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DTZ

117

2014 was a record breaking year for industrial take-up, with 23 national and regional records broken according to the latest figures from DTZ. Total UK take-up reached 32.6m sq ft over 2014, the highest since 2010, driven largely by improving economic sentiment and retailers expanding their logistics networks in response to the growth in online shopping.

DTZ Research’s Industrial Property Times report for H2 2014 also revealed that a record 14.8m sq ft of grade A space was taken over the last 12 months. In the North West, take-up was slightly down from 2013 but this was largely due to a lack of grade A accommodation.

2014 also saw the re-emergence of speculative development in response to the lack of available grade A space, with 9.1m sq ft taken through build-to-suit deals, double the 2013 total. Developers are largely building storage and distribution facilities and targeting locations with good access to the road network.

Take-up was strong for manufacturing (8.8m sq ft), logistics (6.8m sq ft) and retail sectors (12.7m sq ft). Jaguar Land Rover was the most active individual firm in the market in 2014, taking three buildings totaling 673,000 sq ft across the West Midlands. The largest deal of the year was a build-to-suit of over a million sq ft at Thrapston in the East Midlands.

Industrial prime rents are beginning to increase nationally, given the rise in activity and low level of grade A availability, which is driving competition between occupiers. Investor demand was strong in 2014, resulting in a record £6.1bn transacted in total. The largest investment deal of the year was Legal and General’s acquisition of the Ocean Portfolio, a prime, multi-let, industrial and logistics portfolio of 12 assets across the UK including Fradley Park in Lichfield, for £226.5m.

Michael Green, Research Analyst at DTZ commented: “Looking ahead to 2015, the need for speculative development will continue with more schemes across the UK set to be announced. We also anticipate high levels of take-up in 2014 to be maintained over the next five years as industrial output increases and occupiers look to increase their UK footprint, although continued difficulties in the Eurozone may have a dampening effect.“

Take-up in the North West totalled just over £4m in 2014, down 2.7m sq ft from the previous year. Key leasing transactions included a 686,000 sq ft Grade A build to suit deal at Omega in Warrington to the Hut Group and DHL taking 471,000 at the former Comet distribution facility in Skelmersdale. A lack of grade A space is suppressing take-up and contradicts a positive trend in occupier sentiment in the region although developers have begun speculative development with four schemes in Heywood, Knowsley, Chorley and Manchester Airport due for completion by Q3 2015.

Tony O’Keefe, Director, Industrial agency at DTZ in Manchester comments: “Whilst overall take-up figures were down on 2013 this can be explained by limited availability of quality built space and delays associated  with land and pre-let deals, as opposed to a reduction in demand. This will show in significant transactional activity in Q1 2015.

“The continued strength of the logistics sector is demonstrated by Evander Properties and BA Pension funds speculative development at their Revolution scheme in Chorley.

“A new wave of speculative development will see over 500,000 sq ft of new development this year over four schemes, with another 1.6 million sq ft across 7 schemes in the development pipeline. This provides an excellent yard stick measuring confidence in the region.

“Confidence is underpinned by restricted supply and continued occupier demand as demonstrated by the recent success of the region’s largest development sites. Logistics North being a pertinent example. Outline consent was granted last year for 4 million sq ft of development, construction is underway to provide onsite services and road infrastructure and already 25 % of the scheme (over 1 million sq ft) has been taken.”

33

2014 was a record breaking year for industrial take-up, with 23 national and regional records broken according to the latest figures from DTZ. Total UK take-up reached 32.6m sq ft over 2014, the highest since 2010, driven largely by improving economic sentiment and retailers expanding their logistics networks in response to the growth in online shopping.

DTZ Research’s Industrial Property Times report for H2 2014 also revealed that a record 14.8m sq ft of grade A space was taken over the last 12 months. Take-up in the North East reached 2.3m sq ft in 2014, the strongest year on record with 1.4m sq ft of grade A deals completed, driven largely by manufacturing companies.

2014 also saw the re-emergence of speculative development in response to the lack of available grade A space, with 9.1m sq ft taken through build-to-suit deals, double the 2013 total. Developers are largely building storage and distribution facilities and targeting locations with good access to the road network.

Take-up was strong for manufacturing (8.8m sq ft), logistics (6.8m sq ft) and retail sectors (12.7m sq ft). Jaguar Land Rover was the most active individual firm in the market in 2014, taking three buildings totaling 673,000 sq ft across the West Midlands. The largest deal of the year was a build-to-suit of over a million sq ft at Thrapston in the East Midlands.

Industrial prime rents are beginning to increase nationally, given the rise in activity and low level of grade A availability, which is driving competition between occupiers. Investor demand was strong in 2014, resulting in a record £6.1bn transacted in total. The largest investment deal of the year was Legal and General’s acquisition of the Ocean Portfolio, a prime, multi-let, industrial and logistics portfolio of 12 assets across the UK including Fradley Park in Lichfield, for £226.5m.

Michael Green, Research Analyst at DTZ commented: “Looking ahead to 2015, the need for speculative development will continue with more schemes across the UK set to be announced. We also anticipate high levels of take-up in 2014 to be maintained over the next five years as industrial output increases and occupiers look to increase their UK footprint, although continued difficulties in the Eurozone may have a dampening effect.

In the North East the last available grade A buildings in the region, a 264,000 sq ft building in Chester-le-Street and a 138,000 sq ft building at Doxford Business Park, Sunderland, were taken up in Q4, leaving no grade A space. Developers are unlikely to start speculative schemes larger than 50,000 sq ft so any significant grade A take-up is expected to be through build-to-suit deals.

Chris Donabie, Associate Director, Industrial agency at DTZ in Newcastle comments: “Industrial take-up over 50,000 sq ft was strong over 2014, totalling 2.3m sq ft, with healthy activity seen across the manufacturing, warehouse and logistics sectors. Commencement of construction of the Hitachi Rail facility in Newton Aycliffe at over 400,000 sq ft was a significant transaction, as was the letting of Drum One (264,000 sq ft) in Chester-le-Street to Coveris Rigid UK. Both transactions highlight the region’s continued strength and confidence in the manufacturing sector.

“There is now no large Grade A stock available, and for occupiers looking at the key locations in the region there is also a chronic shortage of better quality secondary or refurbished stock. Refurbishment of secondary premises should be given more consideration as the supply squeeze continues. and This has proved successful for UK Land Estates, with the letting of S3 Tyne Tunnel Estate (104,000 sq ft) in early February 2015 after a comprehensive refurbishment programme. Despite the market dynamics, speculative development of larger sheds is not predicted this year, although occupiers are increasingly exploring design and build opportunities.

“Looking forward, occupier demand is encouraging in early 2015 and this along with the lack of stock is pointing toward rental growth and further hardening of incentives in key locations. This is not just the case for larger buildings, with similar supply shortage of good quality units of between 20,000 sq ft and 50,000 sq ft in the region’s ‘hot spots’. Potential rental growth is a welcome boost for landlords and one of the reasons why industrial property in the North East has been so popular with investors in recent times seeking strong returns based on solid fundamentals.”

54

2014 was a record breaking year for industrial take-up, with 23 national and regional records broken according to the latest figures from DTZ. Total UK take-up reached 32.6m sq ft over 2014, the highest since 2010, driven largely by improving economic sentiment and retailers expanding their logistics networks in response to the growth in online shopping.

DTZ Research’s Industrial Property Times report for H2 2014 also revealed that a record 14.8m sq ft of grade A space was taken over the last 12 months. In Yorkshire & Humberside take-up fell over 40% in 2014 to 2.1m sq ft, largely due to the low availability of good quality space, particularly in Leeds – the region’s main market.

2014 also saw the re-emergence of speculative development in response to the lack of available grade A space, with 9.1m sq ft taken through build-to-suit deals, double the 2013 total. Developers are largely building storage and distribution facilities and targeting locations with good access to the road network.

Take-up was strong for manufacturing (8.8m sq ft), logistics (6.8m sq ft) and retail sectors (12.7m sq ft). Jaguar Land Rover was the most active individual firm in the market in 2014, taking three buildings totaling 673,000 sq ft across the West Midlands. The largest deal of the year was a build-to-suit of over a million sq ft at Thrapston in the East Midlands.

Industrial prime rents are beginning to increase nationally, given the rise in activity and low level of grade A availability, which is driving competition between occupiers. Investor demand was strong in 2014, resulting in a record £6.1bn transacted in total. The largest investment deal of the year was Legal and General’s acquisition of the Ocean Portfolio, a prime, multi-let, industrial and logistics portfolio of 12 assets across the UK including Fradley Park in Lichfield, for £226.5m.

Michael Green, Research Analyst at DTZ commented: “Looking ahead to 2015, the need for speculative development will continue with more schemes across the UK set to be announced. We also anticipate high levels of take-up in 2014 to be maintained over the next five years as industrial output increases and occupiers look to increase their UK footprint, although continued difficulties in the Eurozone may have a dampening effect.“

With available stock levels for Grade A or modern premises continuing to fall across Yorkshire & Humberside a number of locations and occupier demand rising, particularly in the 30 – 80,000 sq ft size range, has meant speculative development is back after a seven year absence. Circa 600,000 sq ft is currently under construction most notably three schemes totalling 250,000 sq ft at the Cross Green Industrial Estate in Leeds. Availability levels continue to reduce across the region and occupier demand has risen dramatically.

There have been very few transactions in the design & build market over the past 7 years, with occupiers taking advantage of cut price deals during the recessionary period. With availability falling to record low levels in some locations, occupiers have been forced to consider build to suit / design & build opportunities. There has been a sizeable increase in requirements for build to suit / design & build opportunities with several named occupiers having instructed solicitors particularly in Leeds and Wakefield. Estates across the region are also experiencing record low void levels.

Paul Mack, Director and Head of the Yorkshire Industrial & Logistics Team at DTZ comments: “2014 and the start of 2015 has seen a dramatic rise in occupier demand for buildings below 100,000 sq ft with pent up demand across the Yorkshire region forcing occupiers to consider build to suit / design & build opportunities.

“As a result headline rental levels have risen over the last 12 months by as much as £0.50 per sq ft in some circumstances and incentives levels offered to tenants have decreased significantly with 6 months rent free being the average incentive per 5 year commitment as opposed to 12 months rent free pre 2014.

He added: “Should occupier demand in the large shed market return in 2015 as per previous years, this could cause a real shortage of available premises going forward and it will only take a couple of sizeable transactions to make a real dent in this market.

“With market demand and supply levels continuing to alter on a quarterly basis, it is therefore more crucial than ever to seek advice before deciding on a quoting rent or price or deciding on what size of property should be speculatively constructed.”

55

DTZ has announced the appointment of three new team members to its Leeds office, including one new Director.

Thomas Moore joins the office’s Project and Building Consultancy team as Director, Jack Kettlewell also joins the team as Surveyor whilst Oliver Salisbury joins the Valuation team as Surveyor.

Joining DTZ’s 14 strong Building Consultancy team in Leeds from Summers-Inman LLP, Thomas Moore is a Chartered Quantity Surveyor with 15 years experience in Cost Management, Employer’s Agent and Contract Administrator roles.

He has extensive experience in large scale complex projects including providing project and cost management advice for a 1,400 dwelling regeneration scheme at Navigation Point, Castleford and leading the project team for the Masterplan heritage works at Bowcliffe Hall in Wetherby.

Building Surveyor Jack Kettlewell joins DTZ from AA Projects Ltd and was previously at Harrogate Borough Council after graduating from Sheffield Hallam University. He brings extensive experience of contract administration, project management and the design and procurement of expansion and refurbishment schemes. In addition he has specialist knowledge of the education sector which he is currently utilising in the delivery of DTZ projects for Leeds Beckett University.

Oliver Salisbury is a RICS Registered Valuer and joins DTZ from Garness Jones Limited Chartered Surveyors. His new role as part of the DTZ Valuation team will involve Red Book compliant valuations and reports for a range of clients including funds, lending institutions, property companies and high net worth individuals. In addition, Oliver will be providing valuation advice to DTZ’s public sector clients.

Tim Cameron-Jones, Head of DTZ’s North Region commented: “I am pleased to welcome Tom, Jack and Oliver who join DTZ at a very exciting time, following the completion of our sale to the TPG & PAG Consortium and our beginning as a privately owned global property services company. Their appointments are a further step on our ambitious growth agenda. Establishing Tom’s leadership in QS Services from our Leeds offices allows us to develop this skill line. Jack and Oliver’s appointments will help to further strengthen our building surveying and valuation capabilities, providing our clients with a ‘best in class’ service.”

185

2014 was a record breaking year for industrial take-up, with 23 national and regional records broken according to the latest figures from DTZ. Total UK take-up reached 32.6m sq ft over 2014, the highest since 2010, driven largely by improving economic sentiment and retailers expanding their logistics networks in response to the growth in online shopping.

DTZ Research’s Industrial Property Times report for H2 2014 also revealed that a record 14.8m sq ft of grade A space was taken over the last 12 months. Take-up in Wales reached just short of 1.1m sq ft in H2 2014, the second successive 6 month period with take-up greater than 1m sq ft. This contributed to give 2014 the highest annual take-up on record of 3.4m sq ft.

2014 also saw the re-emergence of speculative development in response to the lack of available grade A space, with 9.1m sq ft taken through build-to-suit deals, double the 2013 total. Developers are largely building storage and distribution facilities and targeting locations with good access to the road network.

Take-up was strong for manufacturing (8.8m sq ft), logistics (6.8m sq ft) and retail sectors (12.7m sq ft). Jaguar Land Rover was the most active individual firm in the market in 2014, taking three buildings totaling 673,000 sq ft across the West Midlands. The largest deal of the year was a build-to-suit of over a million sq ft at Thrapston in the East Midlands.

Industrial prime rents are beginning to increase nationally, given the rise in activity and low level of grade A availability, which is driving competition between occupiers. Investor demand was strong in 2014, resulting in a record £6.1bn transacted in total. The largest investment deal of the year was Legal and General’s acquisition of the Ocean Portfolio, a prime, multi-let, industrial and logistics portfolio of 12 assets across the UK including Fradley Park in Lichfield, for £226.5m.

Michael Green, Research Analyst at DTZ commented: “Looking ahead to 2015, the need for speculative development will continue with more schemes across the UK set to be announced. We also anticipate high levels of take-up in 2014 to be maintained over the next five years as industrial output increases and occupiers look to increase their UK footprint, although continued difficulties in the Eurozone may have a dampening effect.

The largest deal of H2 in Wales was the 220,000 sq ft former Signode premises in Swansea which was sold to Prospect Estates. This is reflective of a wider trend in Wales where occupiers are taking space, regardless of the quality, with a view to refurbishment. At the end of 2014, grade A availability stood at 478,000 sq ft across two sites. Appetite for speculative development is improving with several developers looking at small scale speculative schemes in strategic locations.

Chris Yates, Surveyor in DTZ’s Industrial agency team in Cardiff, comments: “The South Wales industrial market witnessed a much improved 2014 compared to the preceding five years, with take-up totalling nearly 3.4 million sq ft (more than doubling the take-up of industrial space across the region in 2013).  Whilst improved investor return has been a measure of yield compression as opposed to tangible rental growth, there is now a shortage of well located, quality stock.  Cardiff industrial has recently been identified by DTZ research as one of the top three underpriced property markets in the UK. Such factors may point to more mainstream investors re-entering the South Wales market over the next 12 months to capitalise on the improving regional sentiment.

“Whereas speculative development elsewhere in the UK has largely been driven by storage/distribution and logistics facilities along the M1 and M6 corridors, and around the M25, speculative development in South Wales has been at a far smaller scale.  2014 did however demonstrate an increased appetite amongst regional investor/developers, predominantly along the M4 corridor.

“St Modwen’s recently submitted planning application for phase one of their Celtic Business Park speculative development scheme at Glan Llyn, Newport reflects positively heading into 2015.  However, the continued disparity between development cost and property values suggests that new speculatively built schemes are likely to remain limited in number which is a concern if Wales is to attract inward investment.  With a general election on the horizon, as well as the prospect of increased interest rates being likely, 2015 will be a pivotal time for the region’s industrial market to ensure the economic recovery continues on its positive trajectory.”

154

Commercial property investment reached a record high in 2014 with activity in the regions outside of London particularly strong, according to research out today from DTZ.

DTZ today released its 2014 UK Investment Market Update and reported a record turnover for UK property investment last year, with an 11% rise to £56bn. The primary driver was a 40% growth in investment outside Central London, rising from £26bn in 2013 to £36bn in 2014. By contrast Central London transaction volume fell by 10% to £20bn, albeit still the second highest annual total ever recorded.

Martin Davis from UK Research at DTZ commented: “After the very strong UK investment market performance in 2013 we expected the trend to continue in 2014. The continued weight of money allied to low interest rates and the attractiveness of commercial property as an asset class resulted in a record year for property investment. This was also reflected in the diversion of investor interest within the UK toward markets outside Central London.”

Foreign purchasers increased investment outside Central London by an enormous 82%, in a year in which their overall UK spending increased by 26%, from £22bn to £28bn. Funds raised from multiple jurisdictions and North American investors in particular moved into the UK regions in 2014.

Lot size rose sharply in 2014 to £29m, close to the level achieved in the boom years of 2005-07. The underlying cause was a strong increase in the number of large (£100m+) transactions, with over four fifths of this increase taking place outside Central London.

Office investment outside Central London increased by 44% in 2014, to nearly £8bn. Office turnover in Central London remained more or less steady. Both office yields and capital values are at record levels, and investors, both foreign and domestic, are looking outside the capital for higher returns.

Shopping centre and retail warehouse investments showed very strong levels of activity. In the shopping centre sector transactions in 2014 totaled £6bn, across 101 centres, the highest total since 2006. For retail warehouse volume also increased to its highest level since 2010, with £3bn of sales in 127 deals.

There was a large increase in multi-regional portfolio sales in 2014, rising 85% to a record level of £12bn. Transactions here were dominated by 10 very large deals, almost all undertaken by foreign purchasers, and totaling £4bn. This influenced the industrial sector in particular, as industrial portfolios, especially distribution warehouses, made a major contribution to the record £6bn amount of industrial property sold in 2014. Here it was almost exclusively domestic investors who participated, acquiring 36 of the 40 lots sold.

Low bond yields will continue to support investor attraction to commercial real estate, and the continuing recovery in occupier markets will also support investment values. A downward yield shift will be sustained for secondary property as prime yields stabilise. These factors will ensure that in the short term at least investor momentum will carry the UK investment market successfully forward during 2015.

Ben Clarke, Head of UK Research, commented: “The longer the current ultra low interest rate environment keeps the yield spread between property and bonds favourable, the further property yields will be compressed. The UK all-property total return for 2015 is set to again be a double digit, though we expect it to fall short of 2014’s 17.9% return. However, front-loading returns in this way comes at the cost of a sharper correction to commercial property prices down the line when the interest rate environment eventually normalises.”

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Research published by DTZ has identified the UK’s most attractive cities for prime commercial property investment.

Based on comparative property prices for each city in the office, industrial and retail markets, the list pinpoints those cities with the most attractive pricing for investors looking to enter the market now. The report shows that the most underpriced markets are to be found in regions outside of London, while London office and industrial markets look to be around fair value.

DTZ’s Fair Value Index™ for the UK rose to 72 in Q4 2014 from the Q3 figure of 64, meaning that UK property has become more attractive to investors. According to DTZ’s research the plunge in oil prices since last summer has led to UK inflation falling recently to only 0.3%, which has caused the BoE to delay raising interest rates. This has pushed down government bond yields to historically low levels close to 1%, with five-year forward rates also falling to new lows. Current favourable spreads of property yields over bond yields make UK property look attractive on a relative basis as investors search for higher yields in a low inflation environment.

Fergus Hicks, DTZ’s Global Head of Forecasting, says: “Our latest UK Fair Value Index™ shows that UK property has become more attractive for investors. The fall in bond yields and forward rates triggered by lower inflation and oil prices lead us to expect that the property market will continue to look good value in the first half of this year due to attractive spreads over bond yields.”

The industrial sector is currently the most attractively priced sector in the UK, with three of the top five most underpriced markets in DTZ’s UK Fair Value Index™ all in this sector. Higher income yields than the office and retail sectors make it particularly attractive to investors, given the wider spread over government bond yields.

Leeds retail tops the list for commercial value, and indeed all of the five most underpriced markets this quarter are outside of London.

James Bladon, Associate Director in DTZ’s Investment agency team in Birmingham comments: “Although the pricing of investment property has increased sharply over the past year, the recent fall in UK inflation has pushed back the long-expected increase in interest rates.  Coupled with anticipated rental growth and an improving economy, this is making property look more attractive on a relative pricing basis. In general, we think the UK regions offer better value than London and, in the West Midlands, Birmingham Retail is particularly attractive, having been re-rated from ’fairly priced’ to ‘underpriced’ on the basis of DTZ’s latest analysis. Birmingham offices and Birmingham industrial are rated ‘fairly priced’ and we expect them to produce similar returns to Birmingham Retail.”

Over the next five years regional markets are expected to offer the most favourable risk-adjusted returns, while the majority of London markets are fairly priced, with the exception of London West End retail, which is the most overpriced UK market, according to DTZ’s UK Fair Value Index™.

Ben Clarke, DTZ’s Head of UK Research, says: “While there are still plenty of buying opportunities in London due to its status as one of the largest and most sought-after global investment markets, opportunities outside of London are looking attractive to investors given the higher yields available with broadly similar covenants, and occupier markets underpinned by increasing demand and still relatively limited supply.“

Although at the lower end of the rankings, the London office markets are around fair value, with only West End retail looking overpriced . This is due to very sharp declines in yields over the past 18 months and strong investor demand. Manchester office is also ranked in the bottom five due to previous strong yield compression with prime office yields having fallen by 75 bps over the course of last year to reach levels last seen in 2006. However this could arguably be another indicator that Manchester has made a structural shift away from most of the other UK regional office markets, with commensurate lower long term yields.

The findings are based on the DTZ UK Fair Value Index™, which provides a quarterly insight into the comparative attractiveness of current property pricing across 32 UK markets. A score of 100 indicates that all markets are underpriced and zero that all markets are overpriced. A score of 50 indicates a balanced number of over-and underpriced markets. In Q4 16 markets were rated as underpriced, 14 fairly priced and only two as overpriced.

161

Research published by DTZ has identified the UK’s most attractive cities for prime commercial property investment.

Based on comparative property prices for each city in the office, industrial and retail markets, the list pinpoints those cities with the most attractive pricing for investors looking to enter the market now. The report shows that the most underpriced markets are to be found in regions outside of London, while London office and industrial markets look to be around fair value.

DTZ’s Fair Value Index™ for the UK rose to 72 in Q4 2014 from the Q3 figure of 64, meaning that UK property has become more attractive to investors. According to DTZ’s research the plunge in oil prices since last summer has led to UK inflation falling recently to only 0.3%, which has caused the BoE to delay raising interest rates. This has pushed down government bond yields to historically low levels close to 1%, with five-year forward rates also falling to new lows. Current favourable spreads of property yields over bond yields make UK property look attractive on a relative basis as investors search for higher yields in a low inflation environment.

Fergus Hicks, DTZ’s Global Head of Forecasting, says: “Our latest UK Fair Value Index™ shows that UK property has become more attractive for investors. The fall in bond yields and forward rates triggered by lower inflation and oil prices lead us to expect that the property market will continue to look good value in the first half of this year due to attractive spreads over bond yields.”

The industrial sector is currently the most attractively priced sector in the UK, with three of the top five most underpriced markets in DTZ’s UK Fair Value Index™ all in this sector. Higher income yields than the office and retail sectors make it particularly attractive to investors, given the wider spread over government bond yields.

Leeds retail tops the list for commercial value, and indeed all of the five most underpriced markets this quarter are outside of London.

James Bladon, Associate Director in DTZ’s Investment agency team covering the East Midlands comments: “Although the pricing of investment property has increased sharply over the past year, the recent fall in UK inflation has pushed back the long-expected increase in interest rates. Coupled with anticipated rental growth and an improving economy, this is making property look more attractive on a relative pricing basis. In general, we think the regions offer better value than London and, in the East Midlands, Nottingham offices are particularly attractive, being rated in the top five most ‘underpriced’ markets in the UK on the basis of DTZ’s latest analysis. Nottingham industrial is also rated ‘underpriced’, albeit to a lesser degree than Nottingham offices, while Nottingham retail is rated “fairly priced”.

Over the next five years regional markets are expected to offer the most favourable risk-adjusted returns, while the majority of London markets are fairly priced, with the exception of London West End retail, which is the most overpriced UK market, according to DTZ’s UK Fair Value Index™.

Ben Clarke, DTZ’s Head of UK Research, says: “While there are still plenty of buying opportunities in London due to its status as one of the largest and most sought-after global investment markets, opportunities outside of London are looking attractive to investors given the higher yields available with broadly similar covenants, and occupier markets underpinned by increasing demand and still relatively limited supply.“

Although at the lower end of the rankings, the London office markets are around fair value, with only West End retail looking overpriced . This is due to very sharp declines in yields over the past 18 months and strong investor demand. Manchester office is also ranked in the bottom five due to previous strong yield compression with prime office yields having fallen by 75 bps over the course of last year to reach levels last seen in 2006. However this could arguably be another indicator that Manchester has made a structural shift away from most of the other UK regional office markets, with commensurate lower long term yields.

The findings are based on the DTZ UK Fair Value Index™, which provides a quarterly insight into the comparative attractiveness of current property pricing across 32 UK markets. A score of 100 indicates that all markets are underpriced and zero that all markets are overpriced. A score of 50 indicates a balanced number of over-and underpriced markets. In Q4 16 markets were rated as underpriced, 14 fairly priced and only two as overpriced.

132

Evans Property Group has leased the 56,500 sq ft Unit 24 at its flagship Millshaw Park Industrial Estate in Leeds to existing occupier, Express Bi-Folding Doors (EBFD), who has diversified its business through acquisition and will be creating its largest UK showroom, bringing about some 70 new jobs. DTZ acted for Evans in securing the 20 year lease and EBFD was unrepresented.

EBFD has now leased almost 100,000 sq ft at Millshaw Park in under a 12 month period and, having already invested £1m into its first facility, will be committing a further £1m into the new showroom in the next year.

EBFD, which has 4 UK showrooms, leased the neighbouring 43,097 sq ft Unit 23 at Millshaw Park last summer following consistent growth since the company’s establishment 8 years ago. The firm invested £1m in pioneering new machinery for the new unit which was used to relocate its manufacturing and distribution operations into from 3 local sites. 25 jobs were also created.

In January 2015, EBFD continued its bold plans for growth by acquiring a Wakefield-based kitchen, bedroom furniture and bathroom company, safeguarding employee jobs in the process, which is now branded as Express In The Home. The new 56,500 sq ft unit will be utilised to create the company’s largest UK showroom, showcasing both businesses and will facilitate in the region of 70 new, full-time jobs for the local area.

Millshaw Park is one of Leeds’ most established industrial locations with just under 500,000 sq ft of industrial and warehouse accommodation in 29 units ranging from 2,600 sq ft to 60,000 sq ft fronting the Leeds Outer Ring Road.  Existing occupiers include DHL, Crystal Electronics, EBFD and PM Displays.

Steve Bromberg, Managing Director of EBFD, said; “Our decision to move to Millshaw Park last year was to consolidate the business into one smart and easily accessible location which could be reached by our UK-wide client base and from which we could further expand. The recent establishment of Express In The Home is an incredibly exciting move for the business and we are delighted to have both safeguarded local jobs and to also be creating some 70 more. The total £1m investment into the new showroom will create a superb showcase for our business.”

Catherine Godfrey, Property Manager at Evans Property Group, continues; “Our continued investment into Millshaw Park has ensured the attraction and retention of tenants and it is fantastic that EBFD has decided to grow its successful business at the Park. The Park is well placed, just off the M621, for visitors to the new showroom and we look forward to seeing the unit’s transformation.”

Paul Mack, Head of DTZ’s Yorkshire Industrial and Logistics Team, added; “Millshaw Park is one of the largest single owned industrial estates in the region comprising over 463,000 sq ft of high quality warehouse / industrial premises. This transaction means that there is now circa 10,000 sq ft left available representing a record void level of circa 2.2%. We are delighted for our clients to achieve this level of success and this result demonstrates the quality of the estate and the location.”

EBFD regularly has its products featured on TV programmes such as Grand Designs and has additional showrooms in Glasgow, Redhill and Romford.

2014 was a record breaking year for industrial take-up, with 23 national and regional records broken according to the latest figures from DTZ. Total UK take-up reached 32.6m sq ft over 2014, the highest since 2010, driven largely by improving economic sentiment and retailers expanding their logistics networks in response to the growth in online shopping.

DTZ Research’s Industrial Property Times report for H2 2014 also revealed that a record 14.8m sq ft of grade A space was taken over the last 12 months.

2014 also saw the re-emergence of speculative development in response to the lack of available grade A space, with 9.1m sq ft taken through build-to-suit deals, double the 2013 total. Developers are largely building storage and distribution facilities and targeting locations with good access to the road network.

Take-up was strong for manufacturing (8.8m sq ft), logistics (6.8m sq ft) and retail sectors (12.7m sq ft). Jaguar Land Rover was the most active individual firm in the market in 2014, taking three buildings totaling 673,000 sq ft across the West Midlands. The largest deal of the year was a build-to-suit of over a million sq ft at Thrapston in the East Midlands.

Industrial prime rents are beginning to increase nationally, given the rise in activity and low level of grade A availability, which is driving competition between occupiers. Investor demand was strong in 2014, resulting in a record £6.1bn transacted in total. The largest investment deal of the year was Legal and General’s acquisition of the Ocean Portfolio, a prime, multi-let, industrial and logistics portfolio of 12 assets across the UK including Fradley Park in Lichfield, for £226.5m.

Michael Green, Research Analyst at DTZ, says: “Looking ahead to 2015, the need for speculative development will continue with more schemes across the UK set to be announced. We also anticipate high levels of take-up in 2014 to be maintained over the next five years as industrial output increases and occupiers look to increase their UK footprint, although continued difficulties in the Eurozone may have a dampening effect.“

The West Midlands was the best performing region of 2014, achieving higher annual grade A take-up than any other region and a record take-up volume overall.

Simon Lloyd, National Head of Industrial and Logistics at DTZ, says: “Take-up of grade A buildings at increasingly high levels is giving further encouragement to landowners to construct buildings speculatively in order to satisfy some of the pent up demand. The increase in speculative building over the last 12 months has been significant and we expect this trend to continue in 2015.”

Grade A availability in London, South East and East increased to 3.8m sq ft in Q4 with 10 speculative grade A developments brought to the market over the course of 2014. Many areas of the region are still active with substantial speculative development, including Thames Gateway, Heathrow and Park Royal with a total of 1.7m sq ft currently under construction. Total take-up reached 4.8m sq ft in 2014 driven by a number of large retailers, including Waitrose, Asda, Sainsbury’s and Tesco expanding their networks.