A large letting to E-ON of the 9,755 sq.metres (105,000 sq.ft.) former Treasury buildng boosted Nottingham last year but the overall sentiment remains cautious for the current year.
Like other Midlands cities, the test will come with the improving economy and the absorption of existing Grade A space. Helen Longstaffe of DTZ commented: “At the start of last year there was a general concern that the city centre office market would grind to a halt and the number of transactions fall dramatically. These predictions proved to be somewhat downbeat and the Nottingham market has been resilient.” She added that the take up of almost 23,225 sq.metres (250,000 sq.ft.) is above the long term average and “largely attributable to the diverse nature of demand active within the city.” One future problem could be that while supply is restricted because of a lack of new building, Nottingham City Council plans to release around 18,580 sq.metres (200,000 sq.ft.) onto the market. In separate research, DTZ is also cautious about the investment outlook for provincial cities (though foreign investors have recently shown more enthusiasm for deals in the UK regions) and adds that “unless there are more numerous and aggressive requirements from institutions pricing could potentially ease again.”
On the other hand there are institutions prepared to act, as Allianz has shown by forward purchasing Speedo, the swimwear manufacturer’s new headquarters at Miller Birch’s ng2 development. Allianz Global Investors paid £10 million, a yield of 7% for the 3,995 sq.metres (43,000 sq.ft.) building. King Sturge and Innes England advised Miller Birch on the deal. There are also a number of requirements in the market, such as to KPMG and Deloitte as well as the public sector (the Ministry of Justice). These may be more problematic in view of government spending cuts.
One interesting development in Nottinghamshire is at Carriage Court, a quality group of buildings built by the Duke of Portland on his Welbeck Estate. This has now been turned into seven suites aimed at creative industries such as digital publishing and design. A central part of the development, which could provide a model for the rest of the UK, was to breathe life into the local village through new commercial activity. It is being marketed by Knight Frank.
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