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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 OverviewASDA signs at Crescent LinkSainsbury’s expands at BallooRetail Market AnalysisInvestment Market AnalysisLisney has joined forces with SitusPoundstretcher Acquisition ContinuesRating UpdateHairdresser goes back to city centre rootsManagement UpdateBargain retailers expansionOffice Market Analysis Titanic Quarter letting to Marlborough Engineering

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Contracts have been exchanged on a deal, brokered by Lisney, tobring a 78,000 sq ft ASDA store to the Crescent Link retail park inLondonderry.

Planning permission has been applied for to convert a unit currentlyoccupied by Homebase into a full ASDA store. Homebase willmove to a smaller unit adjacent to the new supermarket.

The new store, which would include a 40,000 sq ft sales area,would carry the full range of ASDA products; including food andGeorge clothing.

If given the go-ahead, the new development would create around350 new full and part time jobs at the park, with further jobscreated in the construction and fitting out of the store.

The permanent retail jobs would amount to many hundreds ofthousands of pounds in new salaries circulating in the localeconomy every year, according to ASDA.

Lisney associate director, Nicky Finnieston, says that it is another

boost for the 250,000 sq ft Crescent Link scheme.

“The current economic environment requires new strategies bylandlords as retailers adapt to changing markets. We’ve workedhard at Crescent Link to secure new tenants for units vacated dueto administrations and to reconfigure space to accommodateexisting retailers needing to downgrade, as well as major newtenants,” Mr Finnieston points out.

“Crescent Link is a prime retail destination with the added benefit ofa significant amount of cross-border trade. As a result, we havebeen able to attract a large amount of interest from retailers in adifficult market. The new tenants that we have secured in the pastyear bring a significant amount of investment to the North West andare creating important new employment in the area,” he adds.

Crescent Link is the dominant retail park in its catchment area,providing significant critical mass of retail warehousing withapproximately 243,000 sq ft of space, equating to around 40% ofthe catchment’s total warehouse provision.

ASDA signs at Crescent LinkB Y N I C K Y F I N N I E S T O N

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M Market OverviewB Y D E C L A N F LY N N , M A N A G I N G D I R E C T O R

Another year has passed byquickly so what does 2011 havein store? The commercial propertymarket in Northern Ireland haschanged substantially in the last24 months. A range of factors,both national and global, havecombined to impact on activity inthe market and on propertyvalues. The turmoil in ourbanking system continues and theavailability of capital for propertyrelated projects is limited.

In addition, the recentComprehensive Spending Review

by the Government has introduced fresh austerity measures andsignificant cuts in Public Spending which is likely to lead to afurther deterioration in employment. This, in turn, will dampenconsumer confidence further. This has been evidenced by a furtherdecline in the housing market.

It is not all doom and gloom though. We have seen somesignificant investment transactions in the past year by UKinstitutions who in the main are not debt funded. The retail sectorhas also remained buoyant.

2011 will no doubt be dominated by the affects of NAMA andincreasing numbers of Receiverships and Administrations providingdiscount stock for those with capital to purchase land and property.

Our outlook for 2011 is as ever cautious and realistic. No doubtwe will look back on 2011 as a year when there wereopportunities available

Declan Flynn can be contacted at Lisney on 028 9050 1501 or at dflynn@lisney-belfast.com

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Lisney is the letting and managing agent for the scheme, whose retailers also include Homebase.

Lisney Director, David McNellis, says that Sainsbury’s will act as an important draw for other high quality retailers.

“In a complex deal involving the re-configuration of the existingHomebase space, it is extremely satisfying to have landedSainsbury’s who will bring a lot of additional footfall to the park. We will shortly be releasing the second phase, totalling 20,000 sqft of retail,” he said.

“This will provide excellent opportunities for retailers that arecomplementary to Sainsbury’s and Homebase, and we have

already had some expressions of interest, despite the secondphase having not yet been released.”

Planning permission for the 60,000 sq ft Sainsbury’s was grantedin early 2010.

The application was for part demolition of the existing buildingsand structures on the site and the construction of a new retailstore, extension and reconfiguration of the existing retailwarehouse unit and garden centre, including installation of areplacement mezzanine floor; provision of two retail warehouseunits and associated highway, footpath, landscape and otherworks and improvements.

Development begins following letting to Sainsbury’s at Balloo. Development work has begun on amajor Sainsbury’s superstore at Balloo Retail Park near Bangor.

“In a complex deal involving the re-configuration of the existing Homebasespace, it is extremely satisfying to havelanded Sainsbury’s who will bring a lot ofadditional footfall to the park…”

Retail Market AnalysisB Y N I C K Y F I N N I E S T O N

The headlines surrounding retailsales remained negative throughoutthe middle of 2010 with sales

growth slowing in the 3rd quarter. This was due to low consumerconfidence as the impact of the government’s spending reviewwas anticipated. However, whilst the Christmas period waschallenging for some retailers there has been some positivesentiment from retailers through this crucial period.

In town, there was a reasonable level of new openings throughout2010 with retailers such as White Stuff, Republic, Blue Inc,Guess and Paperchase opening their first stores in NorthernIreland.

Out of town, there have been a number of new lettings on retailparks across the province with notable new entrants to the marketsuch as Home Bargains, Lakeland and Decathalon.

In terms of large scale retail requirement, the discount retailersare continuing to actively acquire new stores throughout theProvince. The likes of Poundland, Home Bargains,Poundstretcher, B&M and Poundworld have been very busyacquiring stores on the high street in shopping centres and retailparks in major towns.

The main food retailers are continuing to take space and competefor market share, with Asda, Tesco and Sainsbury having agreednew stores throughout the year.

Lisney have been active in the retail market with deals done to thelikes of Asda, Sainsbury, B&M Bargains, Boots, The Works andFrankie and Benny’s, as well as securing the appointment asretained agents for Poundstretcher for Ireland north and south.

Nicky can be contacted at Lisney on 028 9050 1501 or at nfinnieston@lisney-belfast.com

Lisney has joined forces with Situs, a global real estateconsultancy firm, to provide specialist real estate debtadvisory and loan management services to the Irishmarket. The platform will provide life of loan services,including primary and special servicing, valuation, duediligence, capital markets advisory services, loansurveillance, asset management, resolution anddisposition services.

Situs is an industry leader in the real estate debtadvisory and asset management sector, with ten officesworldwide including New York, London and Frankfurt.Situs is rated as a special and primary loan servicer byFitch Ratings and Standard & Poor’s and approved byMoody’s.

Commenting on their new association with Lisney,

Bangor born Ryan Smith, Director at Situs stated: “Weare excited to partner with Lisney on this new ventureand believe that our combined strengths will enable bothfirms to provide a unique and powerful integratedplatform to stakeholders in the real estate debt marketin Ireland. Whilst we will initially be based at 25 StStephens Green in Dublin it will be our intention torecruit professionals from within Northern Ireland toprovide specific regional advice.”

Andrew Marsden, Director of Lisney added: “In manyinstances, real estate debt in Ireland requires alternativestrategies to the traditional workout solutions and webelieve that this collaboration offers a mix ofinternational best practice and local real estateknowledge”.

Commercial real estate loanservicing and debt advisoryplatform launchedB Y A N D R E W M A R S D E N

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Investment MarketAnalysisB Y A N D R E W M A R S D E N

As confidence levels have dropped,softening yields have led to fallingcapital values across the UnitedKingdom and across the world. Theimpact of the “credit crunch” and the

lack of available finance have created a vacuum in terms of activityin Belfast and, as major companies have found themselves indifficulties, the market has descended further.

The market generally remains cautious and although late 2009through to 2010 has seen yields stabilse, transactional activity islimited to quality in terms of location and covenant.

What we saw in Northern Ireland in 2010 was activity from theInstitutional Investment market with over £80 million of investmenttransactions completed in the first nine months of 2010. It shouldbe noted that the principal interest is for prime well-let retailinvestments.

Some notable deals include the £48million purchase of LongwoodRetail Park in Newtownabbey by Scottish Widows InvestmentPartnership, representing a 6.2% net initial yield; and theacquisition of Damolly Retail Park in Newry for £34.9m by MetricInvestments plc, representing a 6.25% net initial yield.

Damolly Retail Park in Newry and Longwood Retail Park inNewtownabbey are both prime retail warehouse investments.These modern retail parks are occupied by national retailers oninstitutional leases and it is this type of opportunity which is beingsought by UK Institutions in Northern Ireland.

Strabane Shopping Park in Strabane and Laharna Retail Park inLarne are two of the first retail investments to be marketed by aFixed Charge Receiver. These properties are Open A1 retail parkspredominantly let to National Multiple Tenants and, whilst they arelocated in Provincial towns, they are considered the primary retailassets within those towns.

We understand that these properties are under offer at a pricewhich would reflect an initial yield in excess of 8%. Neverthelessthis demonstrates that there is demand right across the spectrum.

Andrew can be contacted at Lisney on 028 9050 1501 or at amarsden@lisney-belfast.com

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Rating UpdateB Y N I C K Y W R I G H T

A significant amount of work is currently being carried outin GB regarding the general rating revaluation which tookeffect in April 2010. Lisney has a management portfolio offive shopping centres in GB, for which it has beenappealing assessments.

These include the 423,000 sq ft Fareham Shopping Centrein Hampshire, whose tenants include Marks and Spencer,BHS and Next; Vancouver Shopping Centre in Kings Lynn,with tenants such as Sainsbury’s, Argos and Peacocks; the490,000 sq ft Pentagon Shopping Centre in Chatham; OakMall Shopping Centre in Greenock, occupied by the likes ofMarks and Spencer, Debenhams and JJB Sports; andKingsgate Shopping Centre, Dunfermline, with tenantsincluding Debenhams, Evans, and River Island.

All commercial andother non-domesticproperties in GBreceived new rates assessments – leading to significantchanges in rates liabilities for many properties. The 2010assessments show that average rateable values in Englandincreased by around 19% in comparison with the 2005revaluation and those in Wales increased by 20%.

In Northern Ireland, the rating revaluation has beenpostponed until 2015. In GB, a revaluation is carried outevery five years.

Nicky Wright can be contacted at Lisney on 028 9050 1501 or at nwright@lisney-belfast.com

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Lisney to seek 40 new stores forPoundstretcher throughout IrelandB Y N I C K Y F I N N I E S T O N

Lisney has been retained by UK retailer Poundstretcher to acquirearound 40 sites for new stores and to carry out all professionalservices requirements for the company in both Northern andSouthern Ireland.

Poundstretcher currently has 27 stores in Northern Ireland and isseeking to enter the market in the Republic.

Lisney associate director, Nicky Finnieston, says that sites ofbetween 5,000 and 10,000 sq ft in high street, shopping centreand retail park locations are being sought.

“We are pleased to be retained by Poundstretcher, which is amajor UK retailer planning to expand significantly on the island ofIreland,” he points out.

“At present, we are actively looking for around 40 sites in a rangeof locations both North and South.

“In addition, we will be providing the full range of professionalservices, including rent reviews, lease renewals and rating” headds.

Poundstetcher, which delisted from the stock market last year, isone of the UK’s leading bargain retailers with around 350 storesthroughout the UK and Ireland. It sells household goods, clothing,gifts and toys.

The company plans to expand to around 500 stores in the UK andIreland by the end of 2012, capitalising on the existing retailclimate which has favoured discount retailers.

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Hill Street letting sees hairdresser go back to city centre roots. B Y A N D R E W G A W L E Y

One of the local hairdressing industry’s best-known names is defying the recession with a rebirth in Belfast’sCathedral Quarter, following a letting by Lisney.

Bill Harris - who has been at the forefront of hairdressing in the city for more than 35 years - has re-entered theindustry as part of a new enterprise at 52 Hill Street.

Bill Harris Hairdressing - a venture also involving localbusinesswoman Maura Henderson and Italian hair productscompany Expert - has opened for business in a formerLinen Warehouse which was being marketed by Lisneyassociate director, Andrew Gawley.

Mr Gawley says: “We’re pleased to have been involved inproperty transactions concerning the creation of a numberof new businesses recently. The new salon has securedpremises well-suited to its business in a fashionable area.”

Mr Harris says that he is delighted to be able to offer his services to clients again following the demise of hisAssociate Hair Belfast salon in Stranmillis, which was a victim of the recession, last year.

“We’re not long open and the new salon is already doingvery well. I’m hoping to attract back a lot of the clients I had in Stranmillis and we’re looking forward withconfidence,” he adds.

Bill Harris started out with a salon in Church Lane inBelfast city centre, before moving to Botanic Avenue,where he had a salon for 17 years. He was then a director with Toni and Guy in the city before Associate Hair Belfast in Stranmillis.

Andrew Gawley can be contacted at Lisney on 028 9050 1501 or at agawley@lisney-belfast.com

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Management continues to be avery significant focus forlandlords. Lisney’smanagement portfolio hasincreased to in excess of 200properties in the UK, with morethan £80million in rentcollected by the agency perannum and some £30m in service charges.

2010 was a tough year for property management. Landlordsfocused heavily on the collection of rents and service chargeswhilst reducing costs for their occupiers. Our credit controlprocedures have ensured that, in a market where tenants arestruggling to make ends meet, Lisney managed consistently tocollect over 85% of monies due within one week of the due date.

Tenants also put their own costs under the microscope and we sawthe continued emergence of third party consultants to examineservice charges to see if what is being charged complied with theprovisions of their occupational leases. This increased workloadssubstantially throughout the year. However we continued to ensurethat disputes on service charge were kept to the minimum andqueries were turned round as quickly as possible to ensure cashflow continued across the portfolio.

The key factors in ensuring this was our communication and thetransparency of our methodology. Our strong property accountingprocedures stood up to the rigorous examination of tenants andthird parties and will continue to do so in the year ahead.

Recent notable instructions include the 20,000 sq ft, five storeyPotthouse building in Belfast’s Cathedral Quarter owned by a localinvestor and a number of Industrial Parks in Portadown. With fewtransactions happening throughout 2010 the traditional methods ofobtaining new instructions have changed. With more landlordshaving financial difficulties and the emergence of NAMA Lisney haspicked up the management of several mixed use portfolios on theinstructions of receivers. We have also been appointed to theNAMA panel for “Valuers in respect of Property ManagementService Related to Enforcement and Insolvency Matters”. This willhopefully lead to working up of asset management strategies onproperties where enforcement procedures have been taken.

Ciaran O’Kane can be contacted at Lisney on 028 9050 1501 or at cokane@lisney-belfast.com

ManagementUpdateB Y C I A R A N O ’ K A N E

A leading discount retailer has opened 14 new stores acrossNorthern Ireland in just 12 months, with further expansionplanned.

B&M Bargains, which recently opened at the corner of LonsdaleRoad and College Street in Armagh in a deal brokered by Lisney,plans to further expand its presence in Northern Ireland in 2011.

David McNellis of Lisney, who brokered the deal to bring B&MBargains to the scheme in Armagh, says that discount retailers arecurrently in acquisitive mood.

“Retailers like B&M have been very active acquiring sites acrossNorthern Ireland; often securing those units that are vacantfollowing administrations. The current environment suits theirbusiness model, with customers attracted by their low prices andbroad product ranges. These retailers are able to take advantage

of value currently being experienced in the property market,” MrMcNellis points out.

“The Lonsdale Road / College Street site is an excellent locationfor B&M Bargains with 74 onsite parking spaces in the city centreand footfall generators such as the bus depot, Armagh College ofFurther Education and Armstrong Primary school all locatednearby. This first phase of the development is set to expandfurther, with an additional 10,000 sq ft of retail space to be addedin the near future. We are delighted to say that we are alreadyworking up interest in this proposed space,” Mr McNellis adds.

B&M was formed in 1976 and is now one of the leading varietyretailers in the UK. The company’s new Armagh store is situatedon a site comprising a purpose built retail park with 74 on-siteparking spaces. The second phase is set to be developed in 2011.

Bargain retailers expandingacross Northern IrelandB Y D A V I D M C N E L L I S

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Office Market Analysis B Y D A V I D M C N E L L I S

Demand for officeaccommodation is generally inthe region of 2,000–6,000 sq ft,with a good number ofrequirements at this level,although there is a liverequirement of 35,000 sq ftcurrently active. Tenants areconsolidating into smallerpremises by relocating and thereare also negotiations underwayto agree revised longer termrental agreements in exchangefor lower or capped rents atreview.

There is, however, oversupply, which gives rise to greatcompetition among landlords to secure tenants, with ‘deals’being offered on more flexible terms that include breakclauses, shorter leases and enhanced incentive packages.The majority of office transactions being signed in Belfast atpresent are short-term lettings of 3-5 years, with up to 12months rent-free being granted depending on the length ofterm being agreed.

Prime Grade A office rents in Belfast are currently £134.50per square metre and appear to be stabilising at this level.Grade B rents range from £86-£107 per sq metre.

The most notable recent letting in Belfast has been to GraftonInternational within The Boat development, comprising 12,500sq ft.

The development pipeline in Belfast has been limited. Althoughcurrent vacancy is high, a large number of the vacant officebuildings are in need of refurbishment. We understand thereis as much as 1.3 million square feet of office space in theplanning system, but the vast majority of these developmentsare on hold or will simply not be built due to current market andbanking conditions.

David McNellis can be contacted at Lisney on 028 9050 1501 or at dmcnellis@lisney-belfast.com

Titanic Quarter letting to MarlboroughEngineeringB Y A N D R E W G A W L E Y

The off-market deal to bring Marlborough Engineering Limited tothe unit on Queen’s Road was secured by Lisney associatedirector Andrew Gawley.

He says: “We were aware of the company’s requirement foradditional space close to their existing location on SydenhamRoad but with access to an overhead crane”.

The property was not on the market at the time however Lisneyapproached the landlord and acted on their behalf to broker adeal.

“We agreed a deal on behalf of Titanic Quarter Limited for twoyears for 12,566 sq ft,” he adds.

Marlborough Engineering Limited was founded in 1984 and is aspecialist provider of precision engineering services.

Titanic Quarter is a major waterside regeneration project inBelfast.

Andrew Gawley can be contacted at Lisney’s Belfast officeon 028 9050 1501 or at agawley@lisney-belfast.com

Lisney has secured a letting to a leading localengineering firm on behalf of Titanic Quarter Limited.

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