LISNEY 5 LINENHALL STREET, BELFAST BT2 8AA. T: 028 9050 1501 E: PROPERTY@LISNEY-BELFAST.COM W: LISNEY.COM

PulseJ A N U A R Y 2 0 1 2

M A R K E T I N F O R M AT I O N F R O M L I S N E Y

Market Overview

Prime food store investmentopportunity

Major tenant boost forRichmond Centre

Retail Market Overview

Clandeboye & Toscana RetailParks offered for sale

Lisney secures Bootssuperstore for North West

Property Management Update

Pop-up letting secured by Lisney

Deal keeps global firm’s salesoffice in Belfast

Office Market Overview

Industrial Market Overview

Atos retains Lisney to secureconsulting room premises

New tenant secured for11,000sq ft Duncrue unit

Lisney secure significantsavings in Non-DomesticRates

Sainsbury’s opens at Balloofollowing Lisney letting

Vast Valley letting at Heron Road

INSIDE THIS ISSUE...

Located on Strand Road, half a mile fromthe city centre, the prime 70,000 sq ft foodstore has a rental income of £1.1million perannum. It was constructed in 1999 and hasalmost 600 dedicated parking spaces.Offers in excess of £19.4 million are

being sought for the investment andadjoining 0.65 acre development site, andsignificant interest from UK Institutions andProperty Companies is expected.Lisney Investment Director, Andrew

Marsden, says: “The food store sector

continues to be themost buoyant in theNorthern Irelandproperty market as themain food storeretailers continue tocompete for marketshare through theacquisition of new sitesand the extension and redevelopment ofexisting stores.”“As a result, rents on food stores in

Northern Ireland haveincreased over the last fiveyears, and recenttransactions demonstratecontinued rental growth inthe sector,” he points out.Sainsbury’s Supermarkets

Limited has a D&B creditrating of 5A1 and, for the

year ending March 19, 2011, reported aturnover of £21.1billion, with a pre-tax profitof £775million and a net worth of £3.92bn.

Offers in excess of£19.4 million are being

sought for theinvestment and

adjoining 0.65 acredevelopment site

The main FoodStore investmentin Londonderrywhich is let toSainsbury’s until2024, is beingmarketed for saleby Lisney.

PRIME FOOD STORE INVESTMENT OPPORTUNITY

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What will 2012 bring? More of the same?Or will there again be some sort of seismicshift, taking us in a direction we had notexpected? Unfortunately I don’t have acrystal ball and can therefore only look at thecurrent indicators both in our local marketand the remainder of the UK.

Locally, volumes of transactions are at alow ebb and the uncertainty surrounding theEurozone does not fill us with confidence inthe year ahead. Both NAMA and the local

banks are getting to grips with their loanbooks and we would expect this to createsome activity in the market. There are alsosome specific funds who have shown aninterest in the banks’ largest problem -residential land - and if deals can bestructured in this sector, then we will start tosee at least some light at the end of thetunnel.

Lisney was active in all sectors throughout2011, and, for the first time, we produceddetailed market research on the vitality of ouroffice, retail and industrial stock in NorthernIreland. The information that we producedwas so well received that we intend to carryout the market research on an annual basis.

The mainstay of our business continuesto be property and asset management,though you will see from the following pagesthat we have had notable successes in retail

and office lettings and our professionalservices teams remain busy with valuations,rating appeals and more frequently asset andportfolio strategic reviews, giving guidance toboth borrowers and the banks on the wayforward.

You will also see that we are bringingsome notable property investments to themarket in the first quarter of 2012, and thatwe will also be carrying out our first auctionof commercial and residential property sincethe downturn.

So will 2012 be more of the same? Inshort, 2012 will probably look similar, thoughthere will undoubtedly be opportunities andchallenges for both ourselves and our clientsin the months ahead.Declan Flynn can be contacted atLisney on 028 9050 1501 or atdflynn@lisney-belfast.com

MARKET OVERVIEWB Y D E C L A N F LY N N , M A N AG I N G D I R E C TO R

Abundant supplyand low demand aredriving down retailrents. Prime rentshave droppedsubstantially from theheight of the market,typically 30–50% on average. Retailersare holding all of the cards in leasenegotiations, leading to low rents, flexibleterms and, more often than not, turnover deals.High Street retailers are facing ever-

increasing pressure on sales, withconsumer confidence remaining low andonline retail sales continuing to grow atpace. These factors have combined toreduce spending on the high street and inretail schemes. Retailers are having to bemore innovative and must work onimproving the overall retail experience inorder to prevent further leakage from thehigh street to the internet.Tough trading conditions are leading

retailers to focus on all of their occupancycosts and Business Rates are causingincreasing concern. Where payableBusiness Rates would historically havebeen approximately half that of thepassing rent, with rents falling, rates arenow quite often the biggest singleoccupancy cost. We consider this to be amajor issue, and one that the governmentwill have to address if we are to improvethe vibrancy of our city and town centres.There are however, a number of

retailers who are actively looking forstores in Northern Ireland at present andare taking advantage of weak marketconditions to strike favourable deals.Retailers currently active in NorthernIreland include: H&M, Republic, Blue Inc,Caffe Nero, 3 Mobile, Card Factory,Poundstretcher, Poundland, Poundworld,Home Bargains, Boots, and Trespass.In the medium term, rents and vacancy

rates within the prime retail pitches in themajor towns and cities should start tostabilise, but we would predict furthererosion of rents and more voids insecondary retailing locations. This trend isstarting to roll out throughout many of themajor cities in Great Britain, where primerents have stabilised and indeed havestarted to improve over recent months.However towns where there remains ahigh level of available space will seefurther downward pressure on rents.Nicky can be contacted at Lisney on 028 9050 1501 or atnfinnieston@lisney-belfast.com

JD Sports has opened a new 5,000 sq ftstore in time for Christmas, having spent 12weeks fitting the unit out in its stylish new shopfit. The store will stock the company’s fullrange of products from major fashion brands totrainers and footwear and will be a major drawfor the shopping centre.Quiz have opened a new 1,600 sq ft store,

having signed a new 10-year lease on aprominent unit which has been created by thelandlord refurbishment of part of the level 3mall. Yankee Candle has taken a 2,500 sq ftunit, also on level 3, and has opened for tradein time to benefit from the important Christmasperiod.These new lettings add to a number ofother deals completed this year to occupierssuch as: Cheque Centre, O’Brien’s, CardHouse, Indigo and Wall’s Ice Cream (HBSwirl).Lisney Associate Director, Nicky Finnieston,

who secured the lettings, says: “The Richmond

Centre has been open for 26 years anddespite difficulties in the past, remains apopular shopping destination in the city”.“Footfall has been increasing week-on-week inrecent months, and the recent signingsrepresent an important vote of confidence inthe Centre’s future. JD Sports had variousother options in the city but chose to stay atthe Richmond Centre and to expand itspresence.””We are currently in advanced negotiations

with five other major retailers who wish tosecure space in the scheme and we hope tobe making some more lettings announcementsin early 2012” he adds.The Shopping Centre is run by Arrowcroft

who have been appointed by the owners toasset manage the scheme and are activelyworking to further improve and develop it.Arrowcroft is one of the largest privately ownedproperty companies in the UK.

Clandeboye & Toscana Retail Parks inBangor are being marketed for sale by Lisneyand its global alliance partner Cushman &Wakefield.The properties represent thedominant retail park offer in Bangor with acombined floor area of 147,000 sq ft over 11units and 546 car parking spaces. The park isanchored by PC World, Currys, Carpetright,Halfords and Fitness First.Lisney and Cushman & Wakefield are

selling the park on behalf of John Hansen and

Stuart Irwin of KPMG as Fixed ChargeReceivers.Lisney Director Andrew Marsden says that

Clandeboye & Toscana Retail Parks offer anexcellent retail investment opportunity andthat investors will be able to add valuethrough asset management.He says that interest is expected from a

range of investors including UK Institutionsand Property Companies.“We have seen UK institutions and property

companies becoming more active in NorthernIreland over the last two years, particularly fordominant retail parks that provide theopportunity to add value. We are confidentthat Clandeboye & Toscana will be attractive tothese and other investors and we expectsignificant interest in this opportunity,” MrMarsden adds.

Three important new lettings at the Richmond Centre are asignificant vote of confidence in the Londonderry scheme. RETAIL MARKET

OVERVIEWBY N ICKY F INN IESTON ,ASSOC IATE D IRECTOR

MAJOR TENANT BOOSTFOR RICHMOND CENTRE

CLANDEBOYE & TOSCANA RETAILPARKS OFFERED FOR SALE

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One of only twoBoots superstoresin NorthernIreland hasopened atCrescent LinkRetail Park inLondonderry,creating over 40new jobs.

LISNEY SECURES BOOTSSUPERSTORE FOR NORTH WEST

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Lisney has brokered a deal to bring theretailer to Unit 15 at the park, following atemporary letting to World of Furniture afterformer tenant Land of Leather went intoadministration.Change of use planning was secured for

the unit in July, which allowed Boots to openthe 10,000 sq ft superstore in November,following an 8-week shop-fit.

It is a similar format to Northern Ireland’sother Boots superstore at Sprucefield,incorporating an optician.In addition to the new store, which is the

first of its kind in the North West and animportant community facility for theWaterside, Boots will retain its existing citycentre store.Nicky Finnieston of Lisney commented:

“The addition of Boots to Crescent Link, afterlast year’s lettings to Mothercare, Dreamsand Next, further enhances the park’sstanding as one of Northern Irelands topretail destinations. Boots’ decision to takeadditional space in Derry, in addition to anumber of other recent retail deals in theNorth West, underlines the city’s appeal toretailers, even in these difficult times.”

Management continues to be asignificant focus for landlords. Lisney’smanagement portfolio now stands at over200 properties in the UK, with rents of

more than £80million collected each year and £30million in servicecharges.

2011 has continued to be a difficult year for landlords. Tenants,particularly in the retail sector, have watched turnovers fallingresulting in them struggling to meet their financial obligations. Inthese difficult conditions Lisney’s Property Management Team arestill achieving collection rates of over 85% of all monies due within 7days of being demanded. This service has been a critical service toour clients in helping them enjoy a healthy cash flow from theirassets.

Administrations and receiverships have continued to come thickand fast in Northern Ireland’s property market, and our role inproviding the property management function to both processes hasresulted in further growth of our management portfolio during 2011.

In addition to this we have undertaken work as Fixed ChargeReceivers having received appointments from several local lendinginstitutions. This process, along with the other enforcement methodsavailable to banks is perceived to erode value. However a goodmanagement strategy for an asset can preserve and enhance valueto ensure that maximum returns can be achieved at disposal.

As part of our fixed charge receiver offering, the ManagementTeam provides a seamless service in taking control, managing andpreparing assets for disposal. This method of enforcement hasbecome more popular with the lending institutions, particularly forthose assets which do not form part of a complex corporatestructure.

Recent notable instructions include the Jermon Portfolio,incorporating Springhill Retail Park, which to date has been NorthernIreland’s largest fixed charge receivership appointment.

We have also been pleased to add to our managementdepartment with the recruitment of Patricia News, Deirdre Smythand Sarah Cole. Patricia is responsible for a mixed portfolio ofproperties including shopping centres, retail parks, multi-tenantedoffice buildings and leisure schemes. She has gained extensiveclient-side experience over 18 years with substantial privately ownedproperty companies and an international retailer.

Deirdre has 10 years property experience and is responsible forthe management of a mixed portfolio of properties ranging from citycentre offices to shopping centres. Sarah joins us from anotherBelfast based property firm and also has 10 years experience in theproperty industry. Ciaran O’Kane can be contacted at Lisney on 028 9050 1501 or at cokane@lisney-belfast.com

PROPERTY MANAGEMENT UPDATEBY C IARAN O ’KANE , D IRECTOR

Pictured Left to Right: Nicky Finnieston of Lisney with Brian Henning of GenovaNorth West, owners of Crescent Link Retail Park

Lisney has brokered a deal to keepthe Europe, Middle East and Africa salesoffice of a leading US business in Belfastfor the next decade.Qualitrol, part ofDanaher Corp , a manufacturer ofsubstation and transformer monitoringand protection devices, was coming tothe end of a 10-year lease at itspremises on Wildflower Way off theBoucher Road.Acting on behalf of the occupier, and

after considering a relocation opportunity,Lisney agreed a new 10-year lease tokeep Qualitrol at the premises oncommercial terms in line with theprevailing climate.Qualitrol is the global leader in sales

and installations of transformer assetprotection equipment, fault recorders andfault locators. Its products can be foundin electrical supply infrastructure aroundthe world.

Although activity in the office market issubdued, the reality is that there is not a lot ofGrade A stock available. If demandstrengthens, for example as a result of apotential cut in Corporation Tax in NorthernIreland, the existing stock could quickly betaken up.Lisney carried out a survey of the Belfast

office market in August 2011. We haveassessed available stock and categorised itinto Grades A and B, deduced the headlinerents, and compared the findings with anumber of cities in Great Britain. We have alsotaken a ‘snapshot’ of the potentialdevelopment pipeline by considering thevolume of ‘approved’ schemes.We have established that there is currently

an overall available stock of grade A and Bspace totalling 1,009,854 sq ft on the market,overtly. This can be broken down into Grade A- 440,000 sq ft and Grade B – 568,971 sq ft.However you should note that there is

currently less than 10,000sq ft of office spacecurrently under construction in Belfast CityCentre.Stock levels in Belfast are broadly in line

with other GB cities. Within the stock there aretwo buildings accounting for approximately170,000 sq ft. Floor plate sizes arepredominantly in the size range 2-5,000 sq ft,

catering for typicallySME demand.Our analysis shows

that the available officeproduct in Belfast does not show corporateambition as floor plates are too small to attractlarge corporates. This needs to change toimprove the outlook for the local market. Theexisting position taken by the governmentcontinues to influence the market and if notchecked will continue to discourageinvestment and development by depressingrents through the public sector’s rigid leasestructure. This places an imbalance of liabilityon the landlord. This needs to be looked at inthe interests of the market, and NorthernIreland as a whole.Positives for Northern Ireland include a well-

educated labour pool, good IT infrastructure,and competitive costs structure. If some of thenegatives can be addressed, Northern Irelandshould be in a strong position to attractinvestment, particularly if a reduction incorporation tax can be secured.Our detailed Office Market Research isavailable online at www.lisney.comDavid McNellis can be contacted atLisney on 028 9050 1501 or atdmcnellis@lisney-belfast.com

One of Belfast’s first pop-up restaurants has been so successful in its firsttwo weeks that its founders are already planning to extend its lifespan.

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Initially conceived as a three-month venture, the 50-seat HomePop-Up on Callender Street now looks set to remain beyond Januarydue to its popularity.Stephen Chambers of Lisney, who brokered the deal to bring the

pop-up restaurant to the previously vacant city centre unit, says thathe expects the phenomenon to catch on in Northern Ireland. “Theunit was vacant for some time, and in the current market we werelooking at innovative ways to bring in a rental income for thelandlord,” he says. “The concept of pop-up restaurants has been

around for a while in the US and elsewhere in the UK, so we wereaware of it and were open to its potential.“Given the level of retail vacancies in towns across Northern

Ireland, I do feel there is a real chance that the concept will catch on.It will make sense for many landlords and restaurant entrepreneurs. Ithas also proven to be popular with diners.“We are extremely pleased to hear about the success of Home

Pop-Up to date, with the restaurant having been virtually full for bothlunch and dinner almost every day it has been open. And it isencouraging to hear that there is the likelihood of an extensionbeyond its original plan to close in January,” Mr Chambers adds.A team from Mourne Seafood Bar took on the premises on

Callender Street to create the pop-up restaurant, which is open forbusiness seven days a week, late into the evening and operates aBYO policy.Chef Ben Arnold and manager Stevie Haller have transformed the

space into a new restaurant concept collaborating with ReFound touse unwanted and salvaged furniture as the canvas with artiststransforming reclaimed pieces into unique, functional furniture fordining and which are also available to buy. Everything from the coatstand, tables, chairs, pictures are available for purchase.

OFFICE MARKET OVERVIEWBY DAV ID MCNELL IS , D IRECTOR

POP-UP LETTING SECURED BY LISNEY

DEAL KEEPSGLOBAL FIRM’SSALES OFFICEIN BELFAST

Pictured Left to Right: Stevie Haller of Home Restaurant andStephen Chambers of Lisney

Atos won the contract to take over therunning of Social Security MedicalExaminations on behalf of the Departmentfor Social Development (DSD).Andrew Gawley of Lisney has acquired

new premises for the company in Ballymenaand Londonderry and has completed leaserenewals in Newry and Enniskillen. Lisney isalso in the process of acquiring premises for

the company in Dungannon.Atos’ deal to provide the support services

for benefits processing will run for sevenyears, with options to extend for a furtherthree.The business process outsourcing deal –

valued at £82.2million - is for the delivery ofmedical services and supportingadministration, but will also involve the

implementation of IT systems to support theoperation.Atos is a diverse company with expertise

used by sectors including media, banking,government, energy andtelecommunications. Atos Healthcare is thecompany’s medical business processoutsourcing division, comprising 3,000 staff.

Lisney has beenretained by Atos -an internationalservices companywith 78,500employees in 42countries - toacquire medicalconsulting roompremises acrossNorthern Ireland.

ATOS RETAINS LISNEY TO SECURE CONSULTINGROOM PREMISES

Historically take-up for industrial spacehas been steady with little fluctuation.Somewhat unusually at present there are anumber of situations where competitivebidding is taking place to secure properties.Part of the explanation for this is thatoccupiers are favouring fully fitted buildingsin order to save capital expenditure on fit out.Demand is generally at a local level and it

is predominantly from existing occupiers whoare creating market churn. We are currentlyaware of approximately 1million sq.ft. ofrequirement from this sector.Given the level of demand for good quality

space in prime locations and with a lack ofnew modern buildings, we expect a marketwhere more favourable terms are obtainedfor landlords and this could stimulateconstruction.As a whole, we expect occupational

demand for modern buildings to strengthen,but remain cautious. Due to the lack ofspeculative development it is unlikely therewill be sufficient purpose built space availableto meet demand. The availability of spaceover 50,000 sq.ft. is limited.Typically occupation is required within 3-6

months on flexible terms and there are few,if any, companies prepared to wait on designand build opportunities or offer the terms tomake a development viable.In a ‘normal’ market we would expect

developers to respond to the current demandwith a return to speculative development in

mid / late 2012, particularly in areas alongthe main motorway networks and the A1‘Euroroute’ where demand is strongest andspace shortage most acute.Clearly, as indicated, this is not only

dependant on the terms being offered bytenants but the approval of bank financewhich at present is extremely difficult toobtain.As there is a shortage of good quality

space and buildings over 10,000 sq.ft,companies have limited options. Once theavailable modern buildings are occupied,where and how will the demand be satisfiedin these established areas? Occupiers will bedriven to locate out with these locations.Andrew Gawley can be contacted atLisney on 028 9050 1501 or atagawley@lisney-belfast.com

INDUSTRIAL MARKET OVERVIEWB Y A N D R EW G AW L E Y, A S SOC I AT E D I R E C TO R

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Production Services Ireland Ltd is a Belfast-based business with anoffice in Dublin which specialises in rigging and lighting for events.The firm relocated from Carryduff in November and began trading

from Duncrue at the end of the month.Andrew Gawley of Lisney says: “Duncrue offers the company a

central location with excellent yard space for vehicular access. It alsoallows the company to carry out training courses and productdemonstrations.”“Our client is very pleased with the letting to an established and

successful business,” he adds.

Lisney have recently secured significant rates savings at KingsgateShopping Centre Dunfermline, on behalf of Crosslands PropertiesLimited.

Kingsgate Shopping Centre which Lisney manage is a 372,000 sqft retail scheme in the centre of Dunfermline which is anchored byDebenhams and Marks and Spencer. Other national multiples includeNew Look, River Island, Arcadia and Superdrug. It is one of 5 majorshopping centres in GB managed by Lisney on behalf of NorthernIrish clients.

The recent landlord rating appeals were carried out by Ruairi Scullinand involved extensive negotiations with the local assessors office on58 retail units within the scheme. The result of the appeal has been anoverall reduction of £474,000 or 11.40% from the total rateablevalues of the retail units in the scheme.

Ruairi Scullin, says that it is important that Landlords take a closelook at their rateable values and engage with rating experts to appeal.“We have delivered excellent results in the rating appeals at Kingsgate,resulting in a significant saving to the occupational costs of thescheme. In real terms this not only saves the Landlord significantsums but also improves the appeal of the scheme to prospectivetenants. Our success with Dunfermline has shown what savings can

be achieved and we are in the process of appealing the rates on anumber of other schemes that we manage.

For further information on Rating matters please contact RuairiScullin on 028 9050 1522 or email rscullin@lisney-belfast.com

Lisney has let a warehouse and office unit of more than 11,000 sq ft in theDuncrue Industrial Estate, Belfast, to a leading production services company.

NEW TENANT SECURED FOR11,000 SQ FT DUNCRUE UNIT

LISNEY SECURE SIGNIFICANT SAVINGSIN NON-DOMESTIC RATES

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Planning approval is in place for a further20,000 sq ft of retail space, covering eitherone large or two smaller retail units, and theinvestment that will result is expected tocreate dozens of new jobs.David McNellis, Agency Director at Lisney,

says the reconfiguration and updating of theHomebase unit and the creation and openingof Sainsbury’s will result in a big increase infootfall, making the park very attractive toother retailers.“The first phase of redevelopment involved

a complex deal to tailor the existingHomebase space and accommodate a major

new Sainsbury’s supermarket. The secondphase, which we will be releasing shortly, willprovide a great opportunity for retailers whoare complementary to Sainsbury’s andHomebase to benefit from a very prominentlocation in a high footfall, revitalised retailpark,” he points out.“We have already had significant interest in

the second phase from a range of qualityretailers, and we expect even more interestnow that Sainsbury’s is open and drawing alarge number of shoppers,” he adds.Bank of Ireland funded the investment for

the new Sainsbury’s. Commenting on the new

development, Richard McNamara, SeniorBusiness Manager, Bank of Ireland UK said: "Bank of Ireland has worked with John

Morgan Estates Ltd for many years and weare delighted to support the redevelopment ofthis retail park in Bangor. Bank of Ireland iscommitted to supporting its customers duringboth start-up and expansion phases. It isparticularly satisfying to work with a customerwhere their business growth will have apositive impact on the area through jobcreation and commercial development and welook forward to continuing this partnershipwith them on future developments.”

Lisney has let a 4,844 sq ft unit inSydenham to a leading camerarental and services company.Comprising of a showroom, offices and warehousing, the unit at 52

Heron Road has been let to Vast Valley, which specialises in featurefilms, TV drama and commercials, supplying cameras, lenses,accessories and grip equipment.The company is currently supplying equipment for the Good

Vibrations film as well as equipment for a new BBC drama.The letting follows a deal by Lisney to bring Merlin Claims to Heron

Wharf, where it now occupies a 1,850 sq ft first floor office suite.Lisney Associate Director, Andrew Gawley, says: “With a significant

amount of space available in Sydenham, our clients are very pleasedto have secured quality tenants for the space”.52 Heron Road is an end terrace unit with car parking. Heron

Wharf is a two storey office building. Heron Road is located offAirport Road West within the Harbour Estate.

SAINSBURY’S OPENS AT BALLOOFOLLOWING LISNEY LETTING

VAST VALLEY LETTINGAT HERON ROAD

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A 60,000 sq ftSainsbury’ssupermarket hasopened at BallooRetail Park in Bangorfollowing a letting byLisney, and isexpected to helpdraw a large amountof interest to thegrowing schemefrom other highquality retailers.

Pictured Left to Right: David McNellis of Lisney with Raymond Morgan of John Morgan EstatesLtd., Richard McNamara of Bank of Ireland and William Morgan of John Morgan Estates Ltd.