Jones Lang LaSalle sees opportunities in the North East in 2013
Dickon Wood, director of investment at Jones Lang LaSalle’s Newcastle office, says this year’s commercial property investment market in the North East of England has been very similar to that of 2011. Transaction volumes of £230m this year are on a par with last year’s £245m, he notes, and the characteristics are similar in that there have been five large deals – “without which we would be looking at a total volume of commercial deals in the North East of only £70m”, he adds.
The major deals included the acquisition of The Gate in Newcastle by the Crown Estate for £60m and the sale of a student residential scheme at Downing Plaza for £56.4m. There were also two supermarket fundings in Sedgefield and Skelton, accounting for a further £30m: “but outside these areas, market conditions remain very tough,” he notes.
The remaining deals have benefited from the continued interest of investors from outside the region, and overseas. Mr. Wood notes that Jones Lang LaSalle in Newcastle has acquired three prime industrial estates in the North East for a European investor this year, and only a lack of suitable stock in the region is preventing further such acquisitions by this investor.
Pricing outside the prime end of the market has continued to soften as the scarcity of bank funding, declining rents and oversupply of out-of-town offices has combined with the limited demand from tenants to create a “perfect storm” in the market, he continues, but the prime market is holding up OK.
The firm is seeing an increase in receivership sales, which are providing some good opportunities. Such distressed sales will be one of the buzz-words for 2013, Mr. Wood believes, along with prime stock, rebased rents and sustainable income. “Those investors that have access to funds to take advantage of this criteria could well look back on 2012/13 as the best buying opportunities of this cycle,” he concludes.
