East Midlands Property Market Who is Building What & Where?

1. East Midlands Property MarketWho is Building What & Where? Matthew J Wallace RICS Governing Council | East Midlands Regional Board Partner at EC Harris

2. East Midlands Property MarketAgenda • Introduction “Who Is Building What Where?” • What the Figures Say • The East Midlands Property Market • What we are saying • What we are hearing • Future Development • RICS Financial Viability Planning

3. The Macro Property Market Residential - Office National Statistics Property Industrial Retail Commercial Construction Prices “There are three kind of lies….., Lies; Damned Lies…… and Statistics” Benjamin Disraeli

4. Housing Facts | ONS “House Values Still Dropping” “Double-Dip Recession Can Be Seen”

5. National Housing Construction “Sentiment is pretty downbeat” “Nationally the housing market is flat”

6. East Midlands Housing Construction “No sustained growth since 2008” “Volatile but could be sample size”

7. Property Development “Remained negative Since 2007” “East Midlands again more volatile”

8. Industrial Development “Negative Outlook Since 2007” “East Midlands volatile”

9. Office Development “One instance of Positivity since 2007” “East Remained Negative”

10. Retail Development “Retail been negative since 2006” “East Mids Seen Some Improved Sentiment”

11. EC Harris Construction Prices “Dropping Since 2006” “Flattening out in last 2 years”

12. Tender Prices “Significant Movement in East Midlands in 2011” “Correction now occurring”

13. What Our Fellow Professionals Are Saying.. “Very quiet summer, little market activity and confidence in certain sectors still low” Andrew Nichols MRICS, Gadsby Orridge, Derby “Grade A office accommodation is in short supply. Multi-let industrial investments are in demand. Convenience Retail from 3-6000 sq ft is still strong demand although overall vacancy rates are challenging in the retail sector” Matthew Hannah MRICS, Innes England, Nottingham “Leasehold industrial occupier demand has remained firm for units under 10,000 sq ft, and September has seen an increase in larger enquiries in the East Midlands and M1 corridor. Funding still remains an issue for prospective owner occupiers” Tim Richardson MRICS, Innes England, Derby

14. What Our Fellow Professionals Are Saying.. “Work has now started on Kettering's 57,860 sq ft Stanier Retail Park in Northfield Avenue, at least in terms of Phase 1 of that development, following a 24,000 sq ft pre-let to Dunelm. There is realistically no speculative development in Kettering and hence there is talk amongst local agents of relatively short supplies of Grade A office and industrial accommodation” Brendan Bruder BSc MRICS, Abbey Ross. Northamptonshire “Whilst the Daventry commercial property sector is moribund, clients of ours have recently opened a double unit on High Street for their restaurant clients Buddies. Out of town development has concentrated on various planning applications, although funding restrictions confine any development commencements to significant pre-lets or pre-sales such as the phased developments at DIRFT” Brendan Bruder BSc MRICS, Abbey Ross. Northamptonshire “Slight improvement in sentiment but deals are taking an age to complete” Ben Coleman BSc FRICS, Ben Coleman Associates

15. What Our Fellow Professionals Are Saying.. “Northampton is finally motoring with £10m funding agreed for the redevelopment of the rail station and new bus interchange, scheduled to commence before Christmas 2012. Northampton University have broken ground on their 485-unit student accommodation block and Northampton County Council are expected to decide their key representation in the Project Angel site in the Cultural Quarter” Brendan Bruder BSc MRICS, Abbey Ross. Northamptonshire “The commercial market still remains challenging” John A Smith FRICS, R Longstaff & Co. Spalding “CSC now own both Victoria and Broadmarsh Shopping centres (Nottingham) with plans to refurbish/extend both. This will bring supply to the market in both mass market and aspirational retail sectors” Ed Purcell MRICS, Cushman & Wakefield, Nottingham

16. We’re making our existing stock work harder & What We Are Hearing… Section 106’s appear too onerous for developers to commit to build Banks are still not lending, even on pre-let schemes When’s the next CSR? Public sector is still rationalising rather than developing There is literally no appetite or ability to spec build New planning policy is not helping builders build The markets are still very nervous and sensitive to the slightest bad news This hasn’t bottomed out yet… I’m still on holiday Excuses or facts, you decide but sentiment is nervous and lack of confidence is resulting in inertia from developers, large corporates and investors | Local pockets of activity still occurring

17. The Future Where is the Current Opportunity? • Light industrial and logistics warehousing • Residential • Health • Retail and Commercial office will remain depressed for the foreseeable future • Professional advisors are helping clients develop tricky sites and transact in property • You still need to access finance from somewhere • All in the preparation - Better planning around the viability of schemes is required • The rewards are there for the ambitious, who have good advisors and equity

18. RICS Guidance Note Financial Viability in Planning Methodology& Framework – Defines the key functions of development Financial Viability Assessments - Good practice, what’s reasonable and objective in the approach. No sensible Business Case = No Development Benefits - LPA’s, Practitioners, Land Owners', Developers, Investors, Lenders…. Everyone! Although not a panacea, This guidance may go some way in helping resolve some of the current barriers to development inertia

19. Biography | Matthew J Wallace BSc (Hons) MBA PGDipProjMan MRICS Matthew is a Chartered Building Surveyor with over 15 years experience in both public and private sector property consultancy. Currently a Partner at EC Harris, the leading international Built Asset Consultancy who advise and implement property solutions for clients and the communities they operate in. Matthew operates across the UK and has also lead and delivered assignments across Europe and North America. With a specialism in technical due diligence, Matt’s current caseload includes account leadership of the BlueLight, emergency services sector. Professionally, Matt holds several seats within the RICS including: Governing Council | Strategy Advisory Group | East Midlands Regional Board and is former National Chairman for RICS matrics These roles have taken Matthew across the United Kingdom and also to Beijing promoting the usefulness of the profession in emerging markets. Matthew has also been influential in the writing of the RICS’ new corporate strategy. Matt resides in Leicestershire with his family, is a keen sportsman, who supports Leicester City FC and Leicester Tigers RFC. matthew.wallace@echarris.com Mobile: +44(0) 7810 850 324 Tel: +44(0)121 503 2739 Fax: +44(0)121 503 2701 The Leading International Built Asset Consultancy