NovaLoca Blog

Horray and enjoy from all the NovaLoca team.

Have a great (dry!) weekend

CB Richard Ellis has joined the chorus of voices saying that the lack of new office space in central London is squeezing prices higher. During Q1 2010 the recovery in prime rents continued, the group says, and take-up for the quarter was the highest recorded for four years, at 4.4m sq ft. Banks were the key driver of take-up, accounting for 40% of this total.

Although rents in Central London are still 4% lower than a year ago, on a quarterly basis the Central London prime rent index was 6% higher, CBRE says. “This trend was reflected in prime rents, which rose over the quarter to £47.00 per sq ft in the City and £85.00 per sq ft in the West End,” it adds.

Digby Flower, head of Central London office agency at the group, noted: “The high level of take-up has been fuelled by a combination of pent-up demand and good opportunities for tenants looking to take advantage of market conditions. The strong tenant demand produced sharp reductions in supply, with the result that the market balance is tipping back towards the landlord, evidenced by the prime rent rise across all markets and the reduction of rent-free periods.”

CBRE says a new phase of development is now underway in the capital, but the effects will not be felt “for a few years yet”.

European commercial property group Segro this week said it was restarting its development programme in response to specific occupier demand “with a carefully selected number of pre-let developments”, as there was limited new supply coming on stream.

Segro reported a rise in the level and quality of enquiries during the first quarter of 2010 as it announced an improvement in its overall vacancy rate to 14.6% from 14.8% at the end  of the previous quarter. It also said rental levels had held up “reasonably well”.

Alongside its Q1 results, the group unveiled a £111.3m deal to buy BAA’s 50% stake in the Airport Property Partnership, a 50:50 joint venture with Aviva Investors that owns 17 industrial assets around the UK’s major airports totalling 3.5m sq ft plus a further three indirect investments. By value, 73% of the joint venture’s assets are in the Heathrow market.

Segro is now in talks with Aviva to expand the Airport Property Partnership by adding around £240m of Segro assets near Heathrow to the joint venture. This deal follows Segro’s acquisition last year of Brixton, an important player in the Heathrow area.

While Nick Leslau and Gerald Ronson won major awards at last night’s Property Awards at London’s Grosvenor House Hotel, congratulations also go to all of you who enjoyed free ice-creams from the NovaLoca team during the evening!

Miranda Munn and her colleagues say they “thoroughly enjoyed” the awards last night although they report that this morning is a “little fuzzy” for some. The intrepid crew got a lift home in a stretch Hummer branded with the NovaLoca logo after handing out free ice-creams from the vehicle while parked outside the awards!

Munn says: “Great entertainment and food as ever and my congratulations to all the winners, but to be honest my favourite bit had to be the lift home…”

“We had loads of great comments and managed to get a prime spot right outside the entrance to ‘The Great Room’. Thanks to all those who stopped to enjoy ice-cream and a chat – great that a number of you managed to join us in the Hummer for champagne.”

“Mention must go to James & Kirsty from Jones Lang LaSalle for their words of encouragement, Mark Nash of Nash Bond for appearing through the roof (and those of you that chose to exit through the roof), and to Mark Gill of Lambert Smith Hampton who even helped with handing out ice-cream.”

Returning after 4:30am, there are a few tired eyes at NovaLoca HQ this morning, but Munn declares: “Two hours’ sleep is not really enough: but SO worth it!”

Let us know what you thought . . . some thought two flavours of ice-cream was just not enough . . . but it was good ice-cream. 

Finally, an award for the Hummer driver, who had to negotiate his way down the farm track toNovaLoca HQ, seen here on Google Street View. His reversing skills were pretty impressive!

Wondering how the government’s Carbon Reduction Commitment (now known as the CRC Energy Efficiency Scheme) will affect you? Looking for a greener property, or thinking about how to improve the carbon footprint of your business?

The new CRC scheme, which began on April 1 this year, is mandatory for organisations consuming more than 6,000 MWh of electricity a year – those with annual bills of about £0.5m, but the effects may trickle down to smaller companies as businesses come under increasing pressure to reduce their carbon footprints and become greener organisations.

The scheme covers both private and public-sector organisations and it has been estimated that around 20,000 businesses have had to register, with around a quarter of these set to participate fully in the process, by buying carbon allowances each year.

As the Liverpool Daily Post noted in March, the position between landlords and tenants is controversial, because the scheme treats the organisation with the supply contract as the one that has used the power and does not divide allowances between landlords and tenants. The British Property Federation produced a guide for landlords and tenants last year and the results of a working party into this issue are “eagerly awaited”, it added.

In the meantime, office space provider Portal has commissioned research into this area with the aim of  helping the commercial property industry understand the importance of the scheme and assisting companies in planning their own sustainable strategies. The “white paper” cites research showing positive returns when buildings are developed or refurbished with carbon management as a key target within the design. “At the same time, clients are increasingly looking for properties which have low emissions and greater energy efficiency”, it adds.

There are lots of sayings that encourage loyalty, including “better the devil you know than the devil you don’t”, but are they necessarily true?

If you are not using MJM Marketing as your direct mailing company, we don’t think such idioms apply.

MJM Marketing’s prices have not risen in three years and the company has now frozen its costs for a fourth year – this includes postage costs, as Royal Mail have not raised its prices to business customers. MJM also offers a price-beating scheme whereby it undertakes to beat any like-for-like quotation.

MJM is also the only direct mailing company that is able to offer you a free listing on NovaLoca when you carry out a direct mailing campaign with them.

So if you are a believer in the grass being greener on the other side, or indeed don’t want to put all your eggs in one basket, give Sarah or Robbie a call on 01767 313332 and see how MJM Marketing will let you have your cake and eat it!

Institutional investors made their largest net commitment to the UK property market for more than three years during Q1 2010, according to new research from Lambert Smith Hampton.

The group’s quarterly UK Investment Transactions (UKIT) report says institutional net investment in UK property was more than £1.1bn, compared with £0.3bn in Q4 2009.

Ezra Nahome, CEO and head of capital markets at LSH, said: “We have been waiting for the banks to begin releasing stock onto the market, and it looks like this process has begun. Many of the sellers in the first quarter have been highly geared property companies. Banks chose not to foreclose on these loans in the bad times but have waited for a recovery in values before looking for repayment.” 

LSH said some investors had also taken the opportunity to lock in profits as values had risen over the quarter.

The group expects recovery to remain “slow but steady” as the year goes on. Ezra noted that while the occupational market – a key investment driver – was showing signs of improvement, investor confidence would remain subdued until after the General Election result had become clear.

More from RICS today. The institute’s Commercial Property Survey for Q1 2010 says rental expectations for office space to let in central London have risen dramatically, as available space has declined for the second quarter in a row.

RICS says that the positive net balance of 57% for central London office property in Q1 2010 was the biggest upward jump on record, from the previous quarter’s reading of zero. “This contrasts with the picture in the rest of the UK where available space is rising across all sectors and rental expectations are still negative,” RICS noted.

Lettings activity in the office and industrial sectors picked up during the quarter, RICS said, although investment demand moderated somewhat outside the capital. The retail sector, however, remained weak, particularly in London where rising available space continues to dampen rental expectations, the institute noted.

The survey, which contains comments from regional surveyors, showed that confidence in the outlook for lettings has increased overall, RICS says, but sentiment was slightly less buoyant than at the end of the fourth quarter of 2009. And some of those questioned were concerned about the impact of mooted public-sector employment cuts following the General Election on regional lettings activity.

The mood improved in the commercial property market in northern England during the first quarter of this year, according to a RICS survey commented on by Crain’s Manchester Business today.

The weekly business newspaper says the survey showed a marginal improvement in the net balance figure for rental expectations (surveyors reporting increases in rental prices during the previous quarter, minus surveyors reporting declines) at –22 for Q1 2010 compared with –16 for Q4 2009, and a strong improvement from the year-ago figure of –78. The last time this figure was positive in northern England was Q3 2007, Crain’s adds.

The survey also found that enquiries for all types of commercial property in the region had increased during the first quarter of this year, and that confidence in the outlook for lettings had also improved. A total of 24% of surveyors in northern England questioned in the survey reported a rise in enquiries during the quarter, up from a net balance of zero in January, the paper says.

Liverpool has 35% of all the current office development underway in the UK, says a report from GVA Grimley. The Liverpool Daily Post reports that around 500,000 sq ft of Grade A or high-quality refurbished office space in Liverpool is under construction.

The latest regional city centre office markets report from GVA Grimley claims that, over the next three years, 775,000 sq ft will become available across a number of new-build or refurbishment schemes, the paper notes.

In contrast to most of the other key regional centres in the report, Grade A availability in Liverpool decreased during 2009, with a fall of 13% in immediately available space over the year, to 379,000 sq ft.

Key schemes currently available include UK Land and Pochin’s Walker House, Rumford Investments’ 20 Chapel Street and Standard Life’s 5 St Paul’s Square, the paper says.