Building Solutions (Midlands) Blog » Commercial

Another slow day on the high street?

Richard — Wed, 08 Feb 2012 17:22:45 +0000

Well it’s not surprising with 1 in 7 UK high street shops stood empty, the bad news for retailers is experts in the sector are predicting further closures as more consumers switch to online retailers. Last year the number of empty shops started to flatten out with just less than 15% or around 50,000 vacant commercial retail properties. This was not helped by a large number of high profile retailers going into administration. Yet again it is the high streets in the south that are bucking the trend strengthening the north south divide. Some of the secondary retail areas seem to be locked in a slow cycle of decline with the least attractive high streets with the lowest foot falls perhaps consigned to history. It is simple supply and demand with online sales doubling over the last decade. There is simply not the demand for retail premises that there has been historically. So what will happen to these empty properties? Some will be demolished and but others may be converted to other use classes, some lend themselves to services offices and others residential use. Clever property owners will look at their portfolio of commercial investment properties and look at conversion of the upper parts to maximise their rental income.

Commercial landlord’s dismay at governments “U” turn on pre-packs

Richard — Thu, 02 Feb 2012 09:25:34 +0000

Many commercial landlords feel that pre-packs are often used as nothing more than an accounting procedure to avoid paying thousands of pounds on lease agreements. The original plan was to give creditors three days to review information from the insolvency practitioners prior to the pre-pack going ahead. Many in the commercial property world had expressed concerns that three days was insufficient and a longer period was required. This proposal for a notification to creditors prior to the pre-pack has now been completely abandoned. It is the “Phoenix pre-packs”, that are seen by many in the property industry to be the sharpest practice, when a company is cut up and the most profitable sections purchased out of administration by a pre-connected party.

Commercial property set to recover in second half of 2012

Richard — Fri, 27 Jan 2012 07:50:38 +0000

Commercial property forecasters are predicting a revival in the commercial property sector later this year. They cite the Eurozone crisis as a delay to many companies expansion plans particularly in the London commercial property market. Many boards and directors are positive about signing new leases but are holding off. These decisions cannot be delayed indefinitely and analysts believe that many have held off expansion plans for as long as possible. Companies that are performing well are looking to be well placed for the recovery and will want properties in place to support their business plans. Some London post codes are seeing annual returns for commercial property of over eleven percent.

Commercial property transaction volumes drop by over 6% from 2010 to 2011

Richard — Wed, 25 Jan 2012 20:22:44 +0000

The values of commercial property transactions have dropped from just short of 36 billion to just less than 33 and a half billion. In 2011 there were just over 1700 sold mainly by banks or the customers of banks under pressure to stay within their facility agreements. University research estimates that a quarter of all commercial property has 100% outstanding property loans. They estimate that a further 35% are at 70% or more, this mean that 60% of all commercial property will not be re-financeable at the end of their facility terms. This has the knock on effect that banks cannot clear property backed loans off their balance sheets. So they have little or no appetite for speculative property development and new commercial property loans.

Construction industry sees 5,000 firms go to the wall since 2010

Richard — Fri, 20 Jan 2012 20:46:36 +0000

The construction industry has seen over 5,000 firms go into liquidation since 2010 and Pwc are expecting 2012 to be a similarly tough year. 2011 saw a 6% rise in insolvencies from 2010 with the final quarter seeing 656 construction firms fail. Many firms have been hit by a double whammy of a massively reduced speculative development and new build demand coupled with a huge slow down in public sector building projects. Interestingly as the market stalls and construction firms suffer from a lack of new tenders arriving at their offices. Other fragments of the construction and property market are seeing some increase in activity. With planning consultants and architects seeing a growth in those sat on land and disused buildings looking to maximise their value or prepare site for sale through value engineering.

Civil, commercial, and residential sectors of construction industry all see rises in activity

Richard — Sun, 08 Jan 2012 08:51:43 +0000

The purchasing manager’s index has see rises in activity in the three sectors together for the first time in nine months. The area to see the highest level of growth was the civil sector with residential construction seeing the second consecutive month of gains. There has also been a positive rise in construction output for the last 12months. Many in the construction industry have hopes that the government’s plans for large infrastructure project spending will have a positive influence on the civil sector. Will this increase in activity make it harder to find a good builder?

One billion in London property loans sold for 20% discount by Bank of Ireland

Richard — Wed, 26 Oct 2011 19:15:00 +0000

The Bank of Ireland has off loaded a billion pounds worth of UK property loans both commercial and residential office, retail and apartments mainly placed on London property stock. These loan agreements are being traded and purchased by other financial institutions and canny investors. They look to profit by selecting the areas they specialise in and seeing the loan periods out. Banks looking to improve the look of their balance sheets and tidy up their books are motivated to make such discounted sales. Once the darlings of the development funding and more exotic end of the property backed loan market many of the Irish banks are now conspicuous in their absence from this sector.

Cash rich to make a killing on brownfield sites?

Richard — Tue, 25 Oct 2011 11:19:45 +0000

The capital values of many residential development sites has plummeted over the last few years as the banks appetite for lending on residential land and land banks has reduced. The prime residential sites are still selling well and for good prices where the demand and competition is high. The latest quarter’s figures show the first falls in residential land values since 2009. The impact has yet to be felt of the governments offer to carry out joint ventures on development land where they defer payment for the land until the final properties are sold. The supply of sites has risen sharply as many site owners have put off sales hoping the market will improve. Many are now looking to minimise their exposure to residential land prices and improve their liquidity by realising the capital tied up in their sites. Sites going to market are up 9percent where demand has only risen by 3percent. Many sites simply no longer stack up or are viable as their GDV (gross development values) have fallen in line with falls in UK house prices. The only positive is that predictions show that land values will remain stable for the next 12months. So many site owners are looking to construction companies for joint venture proposals.

Property developers need to lead recovery with demand driven commercial property deals

Richard — Sun, 09 Oct 2011 16:36:54 +0000

Developers are more upbeat than they have been for years. Although residential house builders still have concerns that the sale prices they achieve could have a negative effect of their projected gross development values. The commercial sector is more positive as many believe we have reached the bottom of the property cycle and by the time they put deals together demand will have increased. The key to a successful commercial property development is recognising the new demands of commercial tenants and buyers. Many are looking for units with potential for expansion as the UK economy recovers that makes them better placed for investment and expansion opportunities. The lead time between acquiring sites or former commercial properties and redeveloping can often be years. So many of the old hands are trying to mimic the success of those that made good returns when they emerged from the last recession. The appetite of buyers for those sites considered secondary or challenging is massively reduced. This has lead to a change of tack with developers, many are turning to joint venture property developments as a way of spreading risk. Of course this also spreads profits but it means that those who are fortunate enough to have good war chests of cash can aggressively acquire discounted sites. Many of these sites are held by banks, asset management companies or developers who have lost their will to hold and are looking for liquidity rather than cash tied up in vacant sites.

CBI chief calls for a fresh look at housing to simulate the UK economy

Richard — Wed, 05 Oct 2011 12:47:26 +0000

The CBI has rightly focused their attentions on the two major stumbling blocks for the UK residential housing market which are mortgage funding and planning regulations. They have suggested radical ideas including unlocking capital in pension funds and new shared ownership schemes. They have also reaffirmed the need to embrace new planning policies and guidelines as a critical step to the UK recovery. Spending on infrastructure projects was also highlighted as an important part of the economic recovery. With good planning infrastructure projects could be one of the keys to unlocking some of the billions of pounds of potential investment locked up in company accounts.