THE MARKET 2014-15 - Vickery Holman

1 THE MARKET 2014 -152014 saw many of the changes we predicted, with the South West Property MARKET moving forward with increased activity across most sectors. A specific sector to note is the office MARKET , which saw a real recovery last year. Shortages were reported within several locations, which in turn has lead to that rare phenomena rental growth. Despite these encouraging signs, we still await the return of speculative office development, with both rental and capital values giving insufficient returns to provoke developers into action. Meanwhile, speculative industrial development has expanded to the highest levels since before the recession, with this sector continuing to remains something of a mixed bag, with wide ranging performance in our diverse region, although as our investment specialist points out, prime yields are back to pre-recession levels. Within the South West, the leisure sector is clearly a vital cog in our economy and whilst the sector continues to see a somewhat mixed performance, good offerings are doing better and we have seen some general improvement in Hotels, Holiday Parks and Licensed Premises.

2 The potential change in tied Public House agreements are something we will be watching as we go through 2015. MARKET Review 2014 -152 Vickery Holman - THE PellowMRICSM anaging Director ..speculative industrial development has expanded to the highest levels since pre-recession, with this sector continuing to grow. The residential MARKET did grow in 2014 , but saw a slowdown towards the latter part of the year for various reasons, not least of which is the introduction of affordability testing on new mortgage applicants. Over pricing became a real feature, leading to a significant level of stock not selling where vendors expectations exceeded the MARKET reality. A change has occurred after the lengthy period of insufficient new house building during the recession, the result being that we now have more activity and movement from smaller builder/developers as bank funding increased. The provision of affordable homes remains a major issue, with the range of alternative models being looked at to enable predictions for you will have to read on to see the views of our Property Experts.

3 I do look forward to reflecting on the MARKET again in 12 months time and hope we can get as many of our predictions as right as we did last year. I remain confident for the longer term, but one thing we cannot predict, other than the uncertainty it will create, is the outcome of the forthcoming General Election. RetailPicking up from our report last year, the biggest news of the past 12 months is probably the announcement that Primark are going to be coming to Lemon Quay, albeit their 50,000 sq ft store will not open until 2016. This will continue to keep the retail focus in Cornwall on Truro City Centre with the relocations from Lemon Quay required to facilitate the Primark store helping to fill vacant units elsewhere in the the retail MARKET continues to be tough with several boards on prime located shops in King Street, for on the outskirts of Truro there are competing foodstore applications fighting it out, all against a backdrop of a food sector in turmoil with the ongoing growth of the discount stores forcing the big four to rethink their strategies in many is perceived to be room in (or around Truro) for one more foodstore but where?

4 Perhaps we will know next time we write this review in 12 months the eastern fringe of Truro the new park and ride is beginning to take shape and 2015 should see the long anticipated new Waitrose store PER SQUARE FOOT2011 2012 2013 2014 Alan TreloarBSc (Hons) MRICSD irector and Head of Commercial Agency4 Vickery Holman - TRUROP rimarySecondaryTruro IndustrialThe past 12 months has seen limited activity in the industrial and trade counter sectors as restricted supply has meant very few transactions to note. The main focus of industrial activity in the Truro area remains largely on the outskirts of the City at Treliske and Threemilestone. Newham is also an important location but again transactions have been very 2014 saw a significant freehold sale of premises at Threemilestone the sale of the former ITW premises with a floor area in excess of 21,000 sq ft being one of the most significant deals of the has also seen the start of works on the long awaited Walker Business Park on the Threemilestone Industrial Estate and there have been some off-plan pre-sales.

5 The first phase should be complete for occupation in March open MARKET transactions have been in short supply this is not the sign of a poor MARKET we have seen growth in rentals, with our lease consultancy team seeing increases at rent reviews and lease renewals for the first time in the best part of 7 years, and these results are reflected in our PER SQUARE FOOT108642 PER SQUARE FOOT1,000 Sq ft5,000 Sq ft10,000 Sq ft1,000 Sq ft5,000 Sq ft10,000 Sq ft20112012 2013201420112012 PER SQUARE FOOT2011 2012 2013 2014161284 PER SQUARE FOOT2011 2012 2013 2014 Truro OfficeMarket activity has continued to build on the improvements in 2013. There have been deals completing in the popular established locations such as Newham and Threemilestone. Newham remaining popular in particular, offering a well-recognised blend of modern space, car parking and deals have taken place at Threemilestone on the Truro Business Park where tenants are drawn to the good quality modern space in a business park setting.

6 Notable deals include Worldwide Financial Planning taking premises at Newham and the Truro Diocese relocating from their offices at Kenwyn to next 12 months should see more of the same as a lack of supply of new space will mean that the choice available on the MARKET for prospective tenants is not as large as many people initially are beginning to edge forward, though still a long way from pre-recession levels. 1,000 Sq ft5,000 Sq ft161284 PER SQUARE FOOT161284 PER SQUARE FOOT2011 2012 2013 20142011 2012 2013 2014 Primary In TownSecondary In TownPrimary Out of TownSecondary Out of Town6 Vickery Holman - TRURO5,000 Sq Vickery Holman - The MARKET Focus onPenzance Well known for the line-up of foodstores at the approach to the town but is there more to England s most westerly town? There is no getting away from the fact that Penzance is the end of the line but with a population in excess of 21,000 and being 27 miles from Truro, it is large enough and sufficiently removed from other population centres to stand upon its own a limited population to the west of the town it is inevitable that there has been a concentration of retail and wider commercial activity to the east of the town at Eastern Green and the time of writing there is much anticipation around the outcome of the planning application that could bring The Range to Longrock, which will add even more to the draw offered in this location.

7 Year in and year out we have constantly dealt with transactions taking place on the Longrock Industrial Estate with 2014 seeing the completion of the sale of the former Remploy premises and significant lettings on the Questmap Business Park, plus the sale of the Travis Perkins / Screwfix / Brandon Tool Hire investment at the start of the year. 2015 might even see progress with the disposal of the former Cattlemarket which has been in public sector ownership for many office MARKET in Penzance is traditionally quite restricted but this means that available premises are in short supply. The success of the re-launch of the former tax office as office space and a work-hub has proven that there is demand when the right space is made high street retail sector in Penzance has suffered during the prolonged recession and the improvements in the economy are still only beginning to filter through to the high street. New retail lettings are thin on the ground, especially in relation to larger prime located properties as there are few national retailers who would traditionally have taken this sort of space.

8 2015 should see the result of a ballot which will ascertain whether or not the town s business rate payers will vote in favour of a Business Improvement District if a BID is voted for its initiatives should bring a new focus and enthusiasm for the town centre but the ratepayers will have to decide for themselves if it is worth the Council are concentrating their presence in the town centre leaving the former council offices at St Clare available for a mix of development likely to be predominantly residential-led, and national housebuilders have been linked with this retirement apartment developer Churchill Retirement Living looks set to start the development of their high profile new scheme at Wharf Road in 2015, where units will take shape which will benefit from great views looking across Mounts Bay to St Michael s Vickery Holman - PENZANCED etached SemiDetachedTerracedFlat20142012 2013 RETAIL70605040302010 PER SQUARE FOOT ITZAOFFICE2012 2013 20141412108642 PER SQUARE FOOT2012 2013 20141412108642 PER SQUARE FOOTRESIDENTIALAVERAGE SALE PRICE ( )400,000350,000300,000250,000200,000150, 000100,00050,000 INDUSTRIAL Vickery Holman - BODMINF ocus onBodminThe last few years have seen real progress and change in the town with large scale development continuing and further schemes earmarked would struggle to go past Bodmin now and miss the ongoing development of Cornwall Council s new 15,000,000 offices at the old hospital site.

9 Scheduled to open in May 2015, the three storey office block will house 675 workers and agreements have already been announced with partner companies of BT and Cornwall Housing who are to use some of the accommodation. This part of Bodmin is also seeing the start of Wainhomes new Borough View development which will create the largest housing estate in Bodmin. There continues to be strong rumours of retailers interested in the sites either side of the Wolseley Group so in a few years time this part of the town is likely to be to the east has occurred with the building of Phase I of the scheme near Asda, with KFC in residence with a couple of other retail tenants. There is also strong interest in Phase II which would leave this scheme built for the town centre have progressed less than desired, however the intention clearly remains to help it reinvigorate itself with discussions again focusing on pedestrianisation of the road through. The town was this year awarded nearly 6 million to become Cornwall s new cycling town to create a network of cycle routes to link the Camel Trail to off-road cycling at Lanhydrock and Cardinham also continues with the A30 Temple to Higher Carblake scheme which will dual the last section of single carriageway on the A30 between the M5 and Carland Cross.

10 Both businesses and residents in Bodmin will clearly enjoy the benefits of improvements in safety and relieving congestion and central location of the town with its large outreach into neighbouring areas has been recognised most recently by Truro and Penwith College whose plans to build a Bodmin campus have been widely discussed after they came to light. The college reports demand from the north and east of the county with those students having the longest distances and travel times to either of their current sites. Detached SemiDetachedTerracedFlat2012 2012 2013 2013 2014201420142012 2013 RETAIL1412108642 PER SQUARE FOOT ITZAOFFICE14121086421412108642 PER SQUARE FOOT PER SQUARE FOOTRESIDENTIALAVERAGE SALE PRICE ( )400,000350,000300,000250,000200,000150, 000100,00050,000 INDUSTRIAL RetailThe retail sector has suffered the most throughout the recession with high profile companies going into administration and the general change in shopping city centre has been the most affected with a large number of units vacant, however these tend to be to the west of Armada Way.