1. The Investment Market
Tim Luckman
Director, Valuation Advisory
5 February 2014

2. Agenda
• Economy
• Investment trends
• Office sector
• Industrial sector
• Retail and leisure sector
• Conclusions

3. Economy

4. UK Confidence Indicators
Optimism at post-crisis high
Source: European Commission, October 2013

5. GDP % YoY 1990-2017
Economic Growth
Eurozone leads the downswing in 2012
YoY%
6.0
UK
Eurozon e
Wo rld
Forecasts
4.0
2.0
0.0
-2.0
-4.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
-6.0
Source: Oxford Economics,

6. Investment Trends

7. Current Trends – UK Investment Activity
£ billions
Investment by Region
£30
£25
£25
£22
£20
£18
£17
£16
£15
£15
£12
£12
£10
£12
£11
£8
£7
£5
£0.34
2008
2009
United Kingdom
£0.39
£0.37
£0.15
£0
2010
2011
London
2012
Manchester
£0.41
£0.16
2013

8. Current Trends – Who are the vendors ?
3%
13%
Institutions / Pooled Funds
44%
Private Investor
Propco's
30%
7%
Insolvency / Consensual
3%
Unknown
Other
Source: Jones Lang LaSalle, 2013

9. Current Trends – Who are the purchasers?
Global
67%
UK
33%
Source: Jones Lang LaSalle, 2013
2013 (£m)
67%
33%

10. Global Sources of Funds
America
UK Domestic
Europe
Middle East
Global
Asia Pacific

11. Offices

12. Key Messages | Q4 2013
• Big 6 take-up totals 4.3m sq ft in 2013, up 35% compared to 2012
• Manchester & Leeds account for the biggest share of take-up across the Big 6
• Big 6 supply down 15% since end 2012 - to 10.1 million sq ft
• Average overall vacancy rate of 9.4%, across the Big 6
• Grade A supply severely constrained – further tightening expected in the short term
• 1.0 million sq ft under construction across the Big 6, of which almost half is in
Glasgow
• Prime rents increase in a number of markets in Q4 2013
• The weight of money targeting the regions continues to place inward pressure on
yields

13. Manchester City Centre Take-up
Solid performance in terms of leasing activity
000s sq ft
Take-up
1,400
5 Year Average
1,200
1,000
800
600
400
200
0
2003
2004
Source: Jones Lang LaSalle, 2014
2005
2006
2007
2008
2009
2010
2011
2012
2013

14. Manchester Supply
Supply down 9% since end 2012
000s sq ft
Supply (LHS)
3,000
Vacancy Rate (RHS)
14%
12%
2,500
10%
2,000
8%
1,500
6%
1,000
4%
500
2%
0
0%
2003
2004
Source: Jones Lang LaSalle, 2014
2005
2006
2007
2008
2009
2010
2011
2012
2013

15. Manchester Speculative Development | Q4 2013
Just one scheme currently under construction
900
800
000's sq ft
700
600
500
400
300
200
100
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Completed
U/C
Source: Jones Lang LaSalle 2014
Definite Spec Start
Likely Spec Start
50/50 Spec Start

16. Big 6 Investment Volumes by Purchaser Nationality
1400
1200
1000
800
600
400
200
0
2008
2009
2010
UK
Source: Jones Lang LaSalle 2014
Overseas
2011
Undisclosed
2012
2013

17. Long Term Prime Average Yields – UK Cities
Prime UK regional yields nearing long term average levels
Prime Yield %
Regional
Prime Yield
10.0
10 Year Average
Long term
Average
9.0
London City
London West End
6.00%
6.23%
4.75%
5.38%
3.75%
4.37%
5.94%
5.54%
4.72%
8.0
7.0
6.0
5.0
4.0
Dec-87
Dec-88
Dec-89
Dec-90
Dec-91
Dec-92
Dec-93
Dec-94
Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
3.0
Regional preferred
Source: Jones Lang LaSalle 2014
West End
WE Average
City
City Average

19. One Angel Square, £142m
December 2012
REEF Estates/ Ginko Tree
Investments, 6 %

20. 100 Barbirolli Square, £41m
June 2013
Moorfield and Oaktree Capital
Management, 8.75 %

21. 1 Hardman Street £7m
December 2013
Charles Street Buildings
Group, 5.4%

22. Scottish Widows Investment
Partnership, 6.25 %
Sunlight House, £34.5m,
January 2014

23. Industrial

24. Industrial Market – Current themes
Occupational - Distribution
• Good levels of take up
• Grade A Supply continues to diminish
• Strong demand from retailers
• Return of speculative development in prime locations
Occupational - Estates
• Demand and supply vary according to local micro markets
• Limited new supply is hampering demand
• Industrial land continues to suffer pressure from higher value uses
• Increase in activity from occupiers catering for online retail fulfilment particularly parcel carriers

25. Property Market Overview: Yields as at January 2014
Sentiment
Supply
Yield
Single-let
Prime
London
5.50%
South East
5.75%
Regions
6.00%
• Good occupational story
• Limited stock
• Depth of investors
• Yields down
Multi-let
Prime
• Positive sentiment
London
5.50%
South East
5.75%
Regions
6.75%
• Asset class still looks good value
• Strong demand will continue

26. Standard Life
Investments, 5.6 %
Travis Perkins, Omega North,
£52.8m
October 2013

27. Delin, 7.5 %
Titan 350, £15m
January 2014

28. Retail and Leisure

29. Retail Warehouse / Leisure Investment Yields
(Stronger)
Restricted Parks (Bulky)
6.00%
(Stable)
Solus Bulky / DIY
12.0
11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
5.25%
6.25%
(Stable)
Secondary RW
7.25%
(Stable)
Foodstores
4.25%
(Stronger)
Leisure
6.00%
(Stable)
Mar-91
Mar-01
Mar-04
Mar-05
Mar-06
Mar-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Nov-12
Mar-13
Jun-13
Sep-13
Nov-13
Open A1 Parks (Fashion)

30. CBRE Global
Investors, 5.7%
The Circus, £24.45m
January 2014

31. Great Northern £71.1 m
September 2013
Confidential

32. Conclusions

33. SE will remain expensive

34. Who are and will be the purchasers?
2013–2015

35. AND FINALLY…
• Occupational markets continue to improve
• Rental growth
• More speculative development
• Further compression of yields
• Gap between prime and secondary continues to narrow
• More availability of debt BUT CAUTION – debt more expensive!
• Generally, 2014 another strong year
January – What a month!

36. Questions
Tim Luckman
Director, Valuation Advisory
One Piccadilly Gardens
Manchester
M1 1RG
tim.luckman@eu.jll.com
0161 828 6426
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014