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Moving towards a new phase in the cycle

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Yields compress at fastest rate in five years

UK Commercial Property Investment Review Q3 2014

CoStar Group

Every effort has been made to ensure the accuracy of the information held within this report. The publisher cannot accept liability for any loss/damage which may arise as a result of any error or omission of any data. Any data reproduced from this analysis must be accredited to CoStar.

Table of Contents

Overview ........................................................................ 3

Major Events (Q1 -Q3 2014) ............................................ 4

Key Transactions in Q3 2014 ............................................ 7

Highlights from CoStar Data ........................................... 8

Retail on the Upswing ..................................................... 9

Majority of Investment Flows into Regions ....................... 10

Foreign Investment Spreading Beyond London ................. 11

East Asian Capital Flocks to UK Real Estate ...................... 12

Yields Below Five-Year Averages in All Sectors ................... 16

Are Strategies Starting to Shift? ...................................... 17

League Tables: Familiar Faces at the Top .......................... 18

League Tables: Spotlight on Single Branch ........................ 19

Data, Analytics and News Have Come Together .............. 21

Get in Touch with CoStar ................................................ 23

Investment Review Q3 2014

3

Key Figures

£15.2bninvested in UK commercialproperties in Q3 2014 up 20%

on Q3 2013

£4.5bninvested in the retail sector

a 54% increase from Q3 2013

6.97%average all

property yield

its lowest level since Q2 2010

55%of total volume invested outside London

the joint highest share since Q1 2011

£2.5bninvested in “Big Six” regional cities over the last year

up 150% on the previous 12 months

Overview

UK CRE investment is set for its strongest year since 2006, propelled by another strong quarter of trading in Q3 2014. Investment totalled £15.2bn across 750 transactions, a jump of 20% Y-o-Y. Assuming the average Q3 to Q4 uplift is consistent with the previous four years’ results, UK CRE investment is projected to top £62bn in 2014, the highest annual total since 2006.

share of investment again in Q3 with 40% of all investment, the quarter was notable for the weight of capital ploughed into the UK’s retail sector, and retail warehouses in particular. Investment in this subsector quadrupled Q-o-Q to £1.6bn, by far the

were also popular in Q3, with more than £1 billion traded in this sector for only the second time in the last seven years.

In a continuation of the recent trend, investment outside of London strengthened further in

accelerating economy, improving market

pricing in London. As in Q2, 55% of investment found its way into the regions (excluding multi-region portfolios), the highest percentage since Q1 2011.

The sheer weight of demand is pushing down yields across the board. The average all-property yield tumbled another 57bps over the quarter to 6.97%, its lowest level since Q2 2010. However, with yields

in all property sectors, rental growth will need to replace sentiment as the primary driver of capital value growth over the next 12 months. The time for picking up well-let assets and waiting for yield compression to drive values looks to be at an end.

CoStar Group

4

Major Events

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Hyperion Portfolio(55 properties) bought byLegal & General for £556.5m. It is the largest portfoliosale of Q1.

Westfield sells stakes inthree shopping centres(Merry Hill, Derby,Sprucefield) to Intu for acombined £868m.

The £1.7bn sale ofMore London to St Martinscompletes.The joint highest UK propertytransaction of all time.

Apollo Global Managementbuys Aviva's Project Moonportfolio for £352m at11.2% yield.

US investor Hines, on behalfof a German pension fund, purchases Sixty London,EC1, for £245m at 4.75% yield.The building was fully leasedto Amazon in 2013.

Union Investment buysOne Snowhill in Birminghamfor £125m at 6.2% yield.

M&G goes under offeron a 300,000 SF pre-letof 120 Fenchurch Streetin London's City Core,in the latest sign ofstrength in the City'soccupier market.

Asda leases 310,000 SFdistribution warehouse inBelvedere as retailerscontinue to drive demand for logistics.

EY pre-lets 205,000 SF at 25Churchill Place in LondonDocklands. EY will pay£48.50/SF and relocate fromBecket House in London'sSouthbank in 2015.

Barclays Bank takes81,000 SF at 4 PiccadillyPlace in Manchester'slargest leasing deal fora year.

Developers reveal that twoprominent, hitherto-stalledshopping centre developments -Westgate in Oxford andVictoria Gate in Leeds -will begin construction soon.

Wave of spec industrialplans announced withIM Properties’ 54,000SF in Solihull, SEGRO’s93,000 SF in WestLondon, and Prologis’340,000 SF inNorthampton and140,000 SF at Heathrow.

UK Sentiment Eurozone Sentiment 100 = Long term average

115.9

100.9

116.9

112.8

101.2 102.4

UK inflation rate falls to1.9%, below the Bank ofEngland's 2% target for thefirst time since 2009.

Consumer confidenceturns positive forthe first time sinceMarch 2005.

Unemployment figures showa further drop to 7.2% in the threemonths to December 2013.

OECD forecast: UK to grow by0.8% in Q1 and Q2, outpacingUS, Japan, and Germany.

After four years of falling real wages,rises in earnings matched inflation,which fell further.

Economic Sentiment Source: European Commission


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UK Sentiment Eurozone Sentiment 100 = Long term average

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UK economy expands by 0.9% in Q2, as GDP finally edges above its pre-crisis peak.

Economic Sentiment Source: European Commission

M&G Real Estate purchases a Sainsbury's store in East Dulwich for £68m at a 3.95% yield in the largest supermarket trade of Q2.

Legal & General Property forward-fund new Waitrose distribution centre in Milton Keynes in a £114m deal at a yield of just 4.64%.

Big month for London: Blackstone under offer on Alban Gate in the City for £300m, while Tishman Speyer acquires 33 Holbornfor £311m.

FCA signs 425,000 SF pre-let at Stratford's new International Quarter. FCA will move in 2018 and be joined by TFL, which agreed a 250,000 SF pre-let.

Work starts on the 1.06m SF A14 Central distribution centre in Northamptonshire following a major pre-let to an international retailer.

SWIP agrees a £92m deal to forward-fund 167,000 SF of speculative office space at 12 Hammersmith Grove in West London. Completion due in Q1 2016.

Following intense bidding, Land Securities buys Lend Lease's 30% stake in the Bluewater shopping centre in Kent for £696m, reflecting a yield of 4.10%.

10 Upper Bank Street in London's Docklands bought by China Life, Qatar Holding and Canary Wharf Group for £795m in the largest deal of Q2.

Estée Lauder pre-lets the entire 152,000 SF at 1 Fitzroy Place in London's West End in the West End's biggest deal since 2011.

Japanese bank Mizuho pre-lets 193,000 SF at Two New Ludgate in the City in a strong month for London leasing.

Law firm Slater & Gordon completes major ManchesterHQ move, leasing the entire 104,000 SF at 58 Mosley Street.

London's Southbank set for building boom as 1.45m SF Shell Centre and 1.42m SF Elizabeth House schemes given green light. Carlyle Group also launches Bankside Quarter.

Service sector confidence rises to its highest level since June 1998.

A record 345,000 jobs were added in the three months to April, bringing the UK unemployment rate down to 6.6%.

BoE Governor Mark Carney gives a strong indication that interest rates will rise before the end of the year, ahead of market expectations.

CoStar Group

6

Major Events

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UK Sentiment Eurozone Sentiment 100 = Long term average Economic Sentiment Source: European Commission

NFU Mutual buys Manchester's Chancery Place for £57m at a 5.1% yield, as investor interest in the regions starts squeezing yields. Taiwanese investor Cathay

Life makes its UK debut with the £320m acquisition of Woolgate Exchange in the City of London.

Capital & Regional buys 63% stake in Aviva and Karoo's The Mall Fund for £213m.

CTP and Development Securities begin work on 3 St Paul's Place, Sheffield's first spec office since the recession.

JP Morgan prepares to sell Riverside South in Docklands, once earmarked to become its European HQ and one of London's largest schemes.

SWIP acquires BT's Magna Park distribution centre from receivers for £45.4m at a 5.1% yield. M&G acquires Two

Snowhill in Birmingham for £140m at a 6% yield, in a further sign of investor interest in the UK's regional cities.

Havas leases 164,000 SF at King's Cross in London's largest office deal of the quarter. Havas will consolidate staff from 24 offices across London.

In the largest office letting in Scotland, Abstract signs Norwegian firm Aker ASA to 335,000 SF at Aberdeen International Business Park.

Philip Morris Ltd takes final 34,000 SF at 10 Hammersmith Grove, pushing office vacancy in Hammersmith down to a 10-year low of 4.1%.

Amazon signs for a 1m SF mega-shed at the Royal Oak Distribution Centre in Daventry, paying £4.50/SF. It is the second-largest industrial deal of the year.

117.4

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99.9

Scotland votes against independence by 55% to 45%, restoring confidence in the UK economy.

Sterling hits a six-year high against the dollar, amid growing expectations of an interest rate rise before the end of the year.

UK unemployment falls below 2 million, with the unemployment rate dropping to 6% in the three months to August. Phones 4u seeks administration,

placing its 720 stores and nearly 6,000 employees under threat.

Blackstone acquires 125 Old Broad Street in the City of London for £320m at a 4.9% yield.

Goldman Sachs, GoldenTree and Avenue acquire portfolio of 144 nationwide hotels leased to Travelodge for an estimated £520m in an all cash purchase.

Consent granted for Canary Wharf's 5m SF Wood Wharf mixed-use development and ABP/Stanhope's Royal Albert Dock redevelopment.


7

Price: £320mSize (sq ft): 339,303Sector: OfficePurchaser: Cathay LifeVendor: TPG Capital & Ivanhoé CambridgeInitial Yield: 5.10%

Woolgate Exchange, London EC2

Key Transactions in Q3 2014

Price: £520mSize: 144 HotelsSector: HospitalityPurchaser: Goldman Sachs, GoldenTree & Avenue CapitalVendor: Prestbury Investment, West Coast Capital, Aldersgate Investment & Lloyds BankInitial Yield: 6.45%

Travelodge Portfolio

Price: £381m (64%)Size (sq ft): 734,611Sector: OfficePurchaser: The Crown Estate & Norges Bank IMVendor: Church Commissioners for EnglandInitial Yield: 1.50%

The Pollen Estate, London

Price: £320mSize (sq ft): 323,828 Sector: OfficePurchaser: Blackstone GroupVendor: Brookfield Property PartnersInitial Yield: 4.90%

125 Old Broad Street, London EC2

Price: £345.5mSize (sq ft): 559,117Sector: RetailPurchaser: The Crown Estate & Gingko TreeVendor: Abbey Group & FoylesideInitial Yield: 5.04%

Fosse Shopping Park, Leicester

Price: £300m

Price: £300mSize (sq ft): 42,461Sector: Retail

Purchaser: Oxford Properties & Compagnie Financière RichemontVendor: Private Australian InvestorInitial Yield: 2.40 %

130-137 New Bond Street,London W1

Price: £267.8m (50%)Size (sq ft): 824,201Sector: RetailPurchaser: AXA REIM & Gingko TreeVendor: Land SecuritiesInitial Yield: 6.30%

Cabot Circus, Bristol

Price: £155.9mSize (sq ft): 409,144Sector: RetailPurchaser: M&G Real EstateVendor: Stadium Retail InvestmentsInitial Yield: 5.10%

Parc Trostre Retail Park, Llanelli

Price: £140mSize (sq ft): 315,750Sector: OfficePurchaser: M&G Real EstateVendor: Hines Global REITInitial Yield: 6.00%

Two Snowhill, Birmingham

CoStar Group

8

Highlights from CoStar Data

• £15.2bn of UK commercial property investment recorded in Q3 2014, a 20% increase from Q3 2013.

• Retail warehouse investment more than quadrupled to £1.6bn, a seven-year quarterly high.

• Multi-region portfolios trades totalled £3.5bn in Q3, the second-strongest quarter since the crisis.

• £25bn invested in the UK regions in the last 12 months, a 70% increase on the previous 12 months.

• Average all property yield compressed 57bps over the quarter to 6.97%, its lowest level since Q2 2010.

• Average all property yields compressed at fastest rate in over five years in Q3.

• Average Central London office yields sunk to a new cyclical low of 4.7%, a drop of 30bps Q-o-Q.

Chart 1: UK Quarterly Investment Volume (£bn)

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Source: CoStar Group


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Office Retail Industrial Mixed/Other

At 29%, the retail sector accounted for its largest share of volume since Q4 2011, with £4.5bn traded, reflecting a rise of 54% Y-o-Y. Shopping centre investment slowed to £725m, down from £1.2bn in Q2 and the weakest figure since Q2 2013. But retail warehouse investment more than quadrupled Q-o-Q to £1.6bn – by far its strongest quarter since the crisis.

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Retail on the Upswing

Office again led the way capturing 40% of all investment. The sector’s share fell sharply from 48% in Q2, but investment of £6.1bn was still the third-highest quarterly total since the downturn. Outside London and the South East, office volume surpassed £1bn for the third time in the past year, a level never reached in the previous five years. O

ffice

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Chart 2: UK Quarterly Investment by Sector (£bn) Chart 3: Q3 2014 UK Investment by Sector





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Q3 12 Q1 13 Q3 13 Q1 14 Q3 14


Investment in industrial captured 10% of volume, its average over the past five years. Whilst total volume in Q3, £1.5bn, fell slightly from Q2, volume over the past four quarters, £15.7bn, increased 43% over the prior four quarter sum. Deals outside of London and the South East accounted for 45% of volume, up from its five year average of 40%.

CoStar Group

10

Chart 4: Q3 2014 Investment Volume by Region(Total Value & Breakdown by Sector)

`

41%

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£553mNorth West

£5,331mLondon

£1,776mSouth East

£691mScotland

£516mWest Midlands

£220mWales

£744mSouth West

£110mNorth East

£720mEast Midlands

£541mYorkshire & H.

£396mEast of England

1%

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OfficeRetailIndustrialMixed/Other

Source: Costar Group

Percentages indicate % above/below 5-year average

Fifty-five percent of investment poured into the regions in Q3, in line with Q2’s share, the highest concentration outside of London since Q1 2011. (Figures exclude multi-region portfolios).

Investment in the South West nearly quadrupled Q-o-Q to £744m, the highest volume in over five years.

Over the past four quarters, investment in the East Midlands has been nearly double its five-year quarterly average.

Majority of Investment Flows into Regions

Chart 4: Q3 2014 Investment Volume by Region(Total Value & Breakdown by Sector)

Chart 5: Quarterly Investment Volume (£bn)

London & South East Other Regions Multi-Region Portfolio % Other Regions

OfficeRetailIndustrialMixed/Other


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Percentages indicate % above/below 5-year average

Investment increased 18% Q-o-Q in Scotland to record its highest annual total since the downturn, despite the uncertainty surrounding September’s independence vote.


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N America

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Middle/Far East

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Foreign Investment Spreading Beyond London

Overseas buyers accounted for 33% of UK investment in Q3, a touch below the five-year average of 35%. Whilst foreign investment didn’t account for a growing share of the pie, where capital’s going has been shifting. The share of foreign capital invested in London assets peaked at 83% in mid-2013 but has since been on the decline, and foreign investment is now split evenly between London and the regions.

Additionally, overseas capital is increasingly branching beyond the office sector. In Q3, offices captured 51% of foreign investment, down from the five-year average of 66%. But the share going to retail grew to 20% in Q3 (boosted by the sales of 130-137 New Bond Street and Fosse Park). Investment in mixed-use portfolios and alternative asset classes expanded to 27%, double its historical average, led by Avenue Capital Group, Goldman Sachs and GoldenTree Asset Management’s £520m acquisition of 144 Travelodge Hotels and Blackstone’s £450m purchase of the Max Property Portfolio.

Driven by the two aforementioned deals, the USA was again the largest foreign purchaser in the UK, a title it has held in 14 of the past 23 quarters, with £2.2bn invested in Q3, up 35% on its Q2 volume.

Top Foreign Investor by Country in Q3 2014

Country Investment (£m)

1 USA 2,1832 China 4693 Norway 3394 Taiwan 3205 Singapore 2856 France 2467 Canada 188

UKN. AmericaW. EuropeMiddle/Far EastRest of World






Chart 6: Q3 2014 UKInvestment by Purchaser Region

Chart 7: Q3 2014 LondonInvestment by Purchaser Region

Chart 8: Q3 2014 UK excl. LondonInvestment by Purchaser Region

CoStar Group

12

East Asian Capital Flocks to UK Real Estate

Over the past four quarters, sales of UK commercial property to investors in East Asia hit nearly £5 billion for the first time ever, or 7% of all UK investment. Whilst domestic firms still account for the majority of acquisitions (57%), followed by North Americans

(13%), investment originating in East Asia has steadily grown from an average of 5% in 2009–13 and is now neck and neck with the Middle East’s contribution. And all signs indicate that this share is only likely to increase.

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Rest of the World East Asia Share from East Asia (4 qtr rolling avg)

Investment (£bn) Share from East Asia

Chart 9: Quarterly UK Investment by Purchaser Origin (£bn)


Investors from China and Hong Kong are the dominant force behind this rising level of investment. Combined, they have poured just shy of £4 billion into UK property since 2013, or 42% of all purchases from East Asia. This past quarter, Hong Kong developer Nan Fung made its debut acquisition

in London with the £150 million purchase of 50 Bank Street in Canary Wharf, and numerous other investors from Hong Kong and China—such as China Life Insurance, China Construction Bank, China Investment Corporation, Gingko Tree, Fosun Group, and the Hong Kong Monetary Authority—are all

Interest is Broad… and Growing


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Malaysia China Singapore South Korea Hong Kong Japan Taiwan Thailand

Chart 10: Quarterly UK Investment by East Asian Country (£bn)


active in the market, in addition to new entrants like Bright Ruby. China’s burgeoning middle class, with its disproportionately high savings rate, has fuelled the growth of cash-rich insurers and pension funds. The rise of these firms, alongside ongoing deregulation of rules preventing Chinese institutions from investing abroad kick-started in 2013, underscores China’s increasing activity in the UK.

The Singaporeans are also gaining momentum, investing £3 billion over the past 12 months, four times their investment over the prior five years. In Q3, Temasek made its £175 million London debut with a 50% stake in MidCity Place just a few months after opening its London office—at a cyclical record

rent—in St James’s. It’s likely just the start for the Singaporeans, with Temasek subsidiaries Keppel Corporation and Mapletree Investments, as well as Pontiac Land Singaporean, also rumoured to be eyeing opportunities in the capital.

The Malaysians sprang into action soon after the downturn, but their activity was concentrated in mid-2011 to mid-2013, highlighted by the Malaysian Employees Provident Fund’s acquisition of 12 Spire Healthcare Hospitals for £700 million in Q1 2013, and their joint purchase (with SP Setia Berhad and Sime Darby) of the Battersea Power Station for £400 million in Q3 2012—but activity has waned since.

CoStar Group

14

Central London Offices Remain the No. 1 Target

Perhaps the most noteworthy addition to the East Asia investor roster in recent months is Taiwan. Insurance firm Cathay Life made a splash in London in Q3 with its acquisition of Woolgate Exchange for £320 million in the first UK purchase by a Taiwanese firm. In April 2013, Taiwan’s Financial Supervisory Commission ruled that insurers seeking stable returns could invest in real estate abroad, in an attempt to rein in commercial property prices in Taiwan, where prime yields in Taipei stand around 2% to 2.5%. While these policy changes only apply to a small subset of insurance firms and are fairly restrictive about which properties are eligible, other large institutions such as Fubon Life are clamouring for London property, which still looks attractive compared to pricing at home.

The Koreans as well have had their eyes on London, as noted by the Q3 purchase by Korean Teachers’ Credit Union (alongside Hong Kong’s GAW Capital in their fifth partnership) of Exchange Tower in Docklands for £191 million. The Korean Federation of Community Credit Cooperatives, Hyundai Asset Management, Korea Post, National Pension Service for Korea and Korea Life Insurance, which debuted in the UK in 2012, all remain active in the market.

And the Japanese, big players in the 1980s and only moderately active in recent years, may once again make a name for themselves in London. The Government Pension Investment Fund, rumoured to be allocating 5% of its £1.25 trillion fund into global real estate, is believed to be focusing first on acquisition opportunities in the UK’s capital city.

Since 2009, the majority of East Asian investment has targeted the office sector, which captured 50% of their purchase volume compared to the 44% of volume it garnered in total over that period. Conversely, investors from East Asia have so far been underrepresented in the retail sector, which captured 23% of their spending, compared to 30% in the wider market. There have been instances of Asian capital targeting retail in partnerships, such as the Crown Estate and Ginkgo Tree teaming up to acquire Fosse Park for £346 million in Q3, but this is still a fairly isolated occurrence. With many retail properties needing asset management initiatives and no sure guarantee of rent growth, retail opportunities may be too risky for Asian investors prioritising wealth preservation.

Important to note as well is the sheer amount of cash

these firms have. Over one-third of deals with an

Asian buyer had a lot size of £100 million–£500 million, compared to just 3% of

deals overall.

East Asian Capital Flocks to UK Real Estate (cont.)


15

No Single Reason Driving the Boom

A host of factors are behind this growing wave of Asian capital. In the case of Taiwan, it is largely motivated by changing policy and the extremely low-yielding opportunities available domestically. But more generally, investors are after London’s relative safety and promising demographic trends. London has a highly educated, international population, which is expected to grow 1.2% annually over the next five years, in comparison to the 0.3% annual contraction in Japan expected over the same

period, for example. And with growth slowing down in the Chinese economy, opportunities there are becoming less attractive. Overall, the same factors driving any investors to London—diversification, solid demographics, healthy property fundamentals, liquidity, strong financial and regulatory frameworks—in addition to a few key country- and region-specific trends, are luring Asian firms to the capital, and all signs indicate that momentum is building.

Along those lines, many of the largest retail assets are located outside of London. Asian buyers have concentrated 50% of volume in Central London since 2009, 14 percentage points higher than the share of investment the capital received in total. Whilst certain firms are willing to invest in Outer London (such as China Investment Corporation in Chiswick Park) and others are venturing into the regions (e.g., Beijing Construction Engineering Group in Airport City Manchester), deals outside Central London tend to be the exception, not the rule. Moreover, although deals outside the West End

and the City are relatively rare, both Docklands and the Southbank have seen increasing interest from Asian investors in the past couple of years.

Important to note as well is the sheer amount of cash these firms have. Over one-third of deals with an Asian buyer had a lot size of £100 million–£500 million, compared to just 3% of deals overall. With existing firms and new entrants’ growing appetite for London property, the share of capital originating in East Asia may well expand into the double digits in the very near term.

CoStar Group

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1 2 3 4 5 6 7 8 9 10 11 12 13 140

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Office Retail Industrial

Note: The hotter the colour the more frequent thetransactions at that yieldSource: CoStar Group

Yields Below Five-Year Averages in All Sectors

• Average all property yield fell 57bps over the quarter to 6.97%, its lowest level since Q2 2010, reflecting heightened demand for UK property and improving economic conditions across the UK.

• Retail sector recorded the biggest quarterly fall in average yields, hardening by 88bps to 6.61%. This is the lowest level recorded since the first half of 2011.

• Greatest yield compression over the last 12 months occurred in the industrial sector, with average yields falling from 8.90% in Q3 2013 to 7.40% in Q3 2014, a drop of 150bps.

• Yield gap between London and the rest of the UK narrowed sharply to 250bps. Although still well above the 10-year average (170bps), this is marked turnaround after reaching a peak of 350bps a year ago.

• Yields are now comfortably below their five-year averages in all sectors. Therefore rental growth will need to replace yield compression as the primary driver of capital value growth over the next 12 months.

Chart 11: Average Initial Yield by Sector (Unweighted) Chart 12: Average Yield in London vs. Rest of UK

Chart 13: Q3 2014 Initial Yield Histogram Chart 14: All Property Yield Heat Map

— All Property — Office — Retail — Industrial


— Difference (basis points) — London — UK ex. London


Office Retail Industrial


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03.54.55.56.57.58.59.510.511.512.5

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Yields Below Five-Year Averages in All Sectors

The robust nature of CoStar’s Q3 Investment Review means we can be confident that 2014 will chalk up the largest level of investment in commercial property in the UK since 2006. Investor demand is strengthening in all sectors and regions creating a feeling that there may never be a better time in this cycle to cash in and sell.

Take Manchester’s office market as an example. Last year the investment market was dominated by German and Swiss funds. This year the UK institutions have returned in a big way to provide competition with both M&G and NFU Mutual, for instance, buying trophy headquarters buildings for near 5% yields. In response, there has been a sharp uptick in assets formally on the market, but equally landlords are receiving a major increase in informal approaches. “Manchester is for sale just now” is a not uncommon refrain.

Tellingly there has been a marked increase in portfolio sales. Multi-region portfolio trades were at £3.5bn in Q3, the second-strongest quarter since the crisis. Private equity interest in building sizeable business parks or industrial portfolios is encouraging the trend, but it is spreading to the high street too. Local Shopping REIT is in the process of selling its final 387 assets as Project Renouvier, following its success in selling the forerunner Project Minard earlier this year.

Perhaps most encouragingly, vacancy rates on the high street are back to pre-recessionary levels in the stronger locations as town centres reinvent themselves as more fluid places, benefiting from pop-up shops and more residential.

There are mutterings that the benign environment for UK property is leading people to sit a little too much on their laurels and not face up to some gathering storms. As our Q3 review points out, yields are now below the five-year average in all sectors, so there will need to be rental growth and strong asset management to drive capital values going forward. For 2015 to be the success story it has been for so many in 2014, it is likely the industry will have to work just that bit harder.

Are Strategies Starting to Shift?

Price: c. £1.1bnSize (sq ft): 1,100,000Status: On MarketVendor: NPS

HSBC Tower, London E14

Price: c. £700mSize (sq ft): 516,000Status: On MarketVendor: Deloitte (Receivers)

30 St Mary Axe, London EC3

Price: c. £93mSize (sq ft): 182,979Status: On MarketVendor: Credit Suisse

3 Hardman Square, Manchester

Written by Paul Norman Editor, CoStar News

CoStar Group

18

League Tables: Familiar faces at the Top

Vendor Agent Value £m

1 CBRE 2,644 2 JLL 1,918 3 Savills 1,6934 DTZ 8465 Knight Frank 591 6 Eastdil Secured 507 7 Cushman & Wakefield 456 8 Capital Real Estate Partners 401 9 Morgan Williams 34910 GM Real Estate 342 11 Strutt & Parker 307 12 Colliers International 290 13 Christie + Co 186 14 Michael Elliott 181 15 Lewis & Partners 177

Investment Agents - Vendor Q3

Acquisition Agent Value £m

1 CBRE 1,289 2 JLL 907 3 Savills 7664 Colliers International 704 5 BNP Paribas Real Estate UK 679 6 Knight Frank 606 7 GVA 427 8 Cushman & Wakefield 399 9 Wilkinson Williams 371 10 Lunson Mitchenall 319 11 Allsop 301 12 Harper Dennis Hobbs 300 13 Dowley Turner Real Estate 265 14 DTZ 263 15 Michael Elliott 254

Investment Agents - Acquisition Q3

Source: CoStar Group Source: CoStar Group


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Vendor Agent Value £m

1 Eastdil Secured 5072 Capital Real Estate Partners 401 3 Morgan Williams 349 4 GM Real Estate 342 5 Michael Elliott 181 6 Lewis & Partners 177 7 Tudor Toone 173 8 Dowley Turner Real Estate 1089 BCM Real Estate 9410 Edgerley Simpson Howe 58 11 Fawcett Mead 53 12 Cradicks Retail 52 13 Whitmarsh Holt Young 51 14 Wilkinson Williams 5015 Farmer Capital 50

Single Branch Agents - Vendor Q3

Investment Agents League Table MethodologyAll agents active in the UK investment market are invited to participate in CoStar’s league rankings. Participants submit a schedule of investment transactions subject to any confidentiality restrictions.

All deals submitted for inclusion are independently verified by our Research Team. Contact [email protected]

League Tables: Spotlight on Single Branch

Single Branch Agents - Acquisition Q3

Acquisition Agent Value £m

1 Wilkinson Williams 3712 Lunson Mitchenall 3193 Harper Dennis Hobbs 3004 Dowley Turner Real Estate 2655 Michael Elliott 2546 Tudor Toone 2237 Harvey Spack Field 1558 Inglis Howie 1389 Hanover Green 13110 Morgan Williams 12911 Edgerley Simpson Howe 12212 James Andrew International 8913 Goldenberg Real Estate 8314 Farmer Capital 7215 Finn & Co 71

All of the top Investment Agents* in these league tables are Propex members. Find out more: www.costar.co.uk/products/propex

* Based on Top 5 Investment Agents– Vendor & Acquisition

Source: CoStar Group Source: CoStar Group

CoStar Group

20

With the market well on track to break new records, are you lagging or leading the race to outrun your competition?

Over 600 UK firms have already signed up to CoStar Suite.

Find out why at www.costar.co.uk or call 020 3205 4500

Don’t waste the moment. Get the advantage of integrated Data, Analytics and News.


21

Access a unique combination of Data, Analytics and News, offering the most comprehensive macro-to-micro explanation of the latest trends in the UK property market.

CoStar’s proprietary data, which underpins this report, is sourced directly from UK property agents, investors and other involved parties to accurately reflect the transactional market in real time.

Typically 600+ investment deals are recorded each quarter, more than any other data source. The Analytics team then overlays top-down analysis of the UK market on this unique dataset, breaking down investment trends by sector, sub-sector, geography, lot size, investor type, and yield. Finally the News team adds perspective to the analysis by providing timely industry and market updates.

For more information on our methodology or the data in this report please contact one of the authors below

Iain Smyth Senior Research Associate T: 014 1354 0629 E: [email protected]

Ola Dawodu Research AssociateT: 014 1354 0683 E: [email protected]

Francesca CookeReal Estate EconomistT: 020 3205 4624 E: [email protected]

Mark Stansfield Senior Research Analyst T: 020 3205 4589 E: [email protected]

Paul Norman Editor, CoStar News T: 020 3205 4510 E: [email protected]

Data, Analytics and News Have Come Together

22

$E AT S H O P G Y M

Meet the property lawyers who know their way aroundAt Osborne Clarke, our specialist legal advice for real estate investors is second to none. That’s because we have one of the highest ratios of partners in Europe with £2bn of investment deals under their belts. That’s why Chambers UK said of us: ‘Quite simply, they get it.’ And that’s why we’re just the right partner for you.

To fi nd out more about what we can do for you, please contact Peter Day, Head of Investors:[email protected]

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CD3896_OC_real_estate_advert_AW_f.indd 1 22/10/2014 18:29


23

$

E AT S H O P G Y M

Meet the property lawyers who know their way aroundAt Osborne Clarke, our specialist legal advice for real estate investors is second to none. That’s because we have one of the highest ratios of partners in Europe with £2bn of investment deals under their belts. That’s why Chambers UK said of us: ‘Quite simply, they get it.’ And that’s why we’re just the right partner for you.

To fi nd out more about what we can do for you, please contact Peter Day, Head of Investors:[email protected]

OC. Connected insights.osborneclarke.com

CD3896_OC_real_estate_advert_AW_f.indd 1 22/10/2014 18:29

Get in Touch with CoStar

CoStar Group (Nasdaq: CSGP) is the leading provider of commercial real estate information, analytic and marketing services. Founded in 1987, CoStar conducts expansive on-going research to produce and maintain the largest and most comprehensive database of commercial real estate information.

Our suite of online services enables clients to analyse, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities.

CoStar maintains offices throughout the U.S. and in Europe with a staff of approximately 2,000 worldwide, including the industry’s largest professional research organisation.

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