The year of the asset manager
2013 will be the year of the asset manager, said Richard Batten, UK executive chairman of Jones Lang LaSalle, ahead of the IPD annual conference last week. Occupiers are continually seeking to improve productivity and being more efficient in how they use buildings, he noted: occupiers will be using lease events next year to drive productivity “through property consolidation, greater efficiency of spatial use and negotiation of reduced rents resulting from poor occupier demand”.
Mr. Batten said that while most people now accept the polarisation “between those with and without equity, and between London and the rest of the UK”, some of those who talk down the regions could be losing out to some degree. While most overseas investors are not currently going into regional markets – even though there is undoubtedly some property outside London that boasts the exact same investment criteria (security of income, prospects for growth) – he suspects that some will start to change their minds in 2013 as premiums are applied to Central London property.
Relatively fast-growing towns – “less regional centres, but more growth stories” – will start to attract funding as institutions anticipate demand in places with limited supply. Mr. Batten identified Cambridge, Milton Keynes, Reading and Brighton as such hotspots. “It will continue to be a north-south divide, although I anticipate Manchester and Glasgow will buck this trend,” he added.
With regard to secondary property, yields are widening to the point where real value can be found, he says: for asset managers, secondary property survival is about maintaining income streams, keeping tenants happy and voids down, reducing vacancy costs, and making sure that all lease events are properly anticipated.
“We’re now dealing with different people such as new purchasers, and new people at the banks who have a different attitude to risk”, Mr. Batten added. With institutions now becoming lenders, “there are signs that financing will start to trickle back, albeit slowly”.
