Turley & Co UK Property Correspondent Update

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists. 

UK Commercial-Industrial Property | 26 May 2020

Our UK commercial-industrial property correspondent’s observations:

  • Commercial agency and lending transactions driven valuation work has fallen off a cliff.  Asset management and lease advisory is inundated collecting rent and/or agreeing lease variations (re-gears).  Residential lettings surprisingly are busier than ever.
  • Expect topflight investment properties to be keenly sought given buyers out there with cash (pension funds, local authorities etc), with a mandate to acquire to generate income.  Interest rates have dropped so prime property yields will squeeze.
  • Investors will compete for the strong covenant tenants who have been relatively unaffected by the pandemic and that can continue to operate and pay rent – investors want these tenants on their books more than ever.  Property essential business asset classes will standout: supermarkets, petrol stations, storage, distribution and logistics warehouses, etc.
  • In the last 12 months a Science Park building was acquired at 5.0% with long lease tenants with R&D funds in reserve £50M plus.  Late 2019 a leisure park property tenanted by national chain cinema and restaurants, transacted at circa 7.5%.  The 2.5% cap rate difference is expected to considerably increase given the pandemic that caused next to no rent income for the leisure park and probably not for 6 months.
  • High street retail could be almost wiped out and some UK investment values could be close to vacant possession values.  Major retail brands with a substantial online presence are more solid.  But for other high street retailers, the pandemic lockdown is the last straw.  Turnover rents are a suggested strategy and potential solution.
  • National restaurant chains have required landlords’ agreement to 50% rent reduction ‘by the end the of week’, threatening otherwise the company could pass over to receivers.
  • People are signalling they want to work from home more often.  Anecdotally, a 700 staff firm survey confirmed 84% want to WFH more frequently once the crisis is over.  This has obvious potential to disrupt the office property market.
  • Office rents will probably not see much growth for the foreseeable future given businesses will potentially reduce footprints and given WFH.  Office users are currently mindful of a full rent burden and underutilised office facilities/ real estate. 
  • Many city dwellers will shift their focus to moving into rural areas to get away from the rat race, and to have some space and fresh air (but nearby trainlines/ commuter lines), for a fraction of city housing prices.  One large agency has reported a sudden spike in rural enquiries.

 
Turley & Co UK Property Correspondent | 26 May 2020

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Retail spending delights Hawke’s Bay retailers | NZH | HBT

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists. 

Massive bounceback in retail spending … 

“After seven weeks of being closed to the public, Hawke’s Bay retailers say the bounceback in in-store attitudes around the region have been “like Christmas” since the country entered level 2 …”

Turley & Co was a turnover rent leases commentator (NZH Premium subscriber access):

NZH | HBT | 18 May 20 | ‘Like Christmas’: Massive bounceback in retail spending delights Hawke’s Bay retailers

 

 

Hawke’s Bay Today: “Turley & Co property strategist and valuer Pat Turley said in the UK there has been talk recently about retail turnover leases being an answer to a high street’s retail quagmire.

Turley said turnover leases occasionally apply for hospitality tenancies in NZ, for Hawke’s Bay supermarkets and regional trade retail stores.

Rent additional to a base rent is triggered by retail sales over a certain level.

He said there are pros and cons and “if the retail sales performance necessary to trigger additional rent is set too high, landlords would unlikely agree.”

Turley also points out that “a certain rent level is needed to support retail property investment and for town centres to prosper.”

He says the model has potential though as a “shared pain and shared gain retail lease basis in Hawke’s Bay.”

Refer to our related news posts UK Retail Property Catastrophe Spurs Turnover Leases Talk and Turley & Co Retail Focus Report

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UK Retail Property Catastrophe Spurs Turnover Leases Talk

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists. 

Contact Turley & Co for lease strategy and market rent valuation advisory.  A lease may enable tenant and landlord activation of market rent reviews and some leases provide for rent reductions.  Our experience includes over 350 resolved or arbitrated commercial property rent valuations including in 2019, annual rents circa $1m at Hamilton and New Plymouth, and the new $20m Hastings Health Centre development advisor and valuer.  Refer to our related news posts: COVID-19 | Premises No Access in Emergency Rent Relief and Retail Property Focus© Hawke’s Bay | April 2020

 

Turley & Co Turnover Leases View

Turnover leases occasionally apply for hospitality tenancies, for supermarkets and trade retail stores like Mitre 10 in NZ.  Rent additional to a base rent is triggered by retail sales over a certain level.

There are turnover lease pros and cons – for a retail property challenges solution, turnover lease settings would be key.  If the retail sales performance necessary to trigger additional rent was set too high, landlords would unlikely agree.  A certain rent level is needed to support retail property investment and for retail locations to prosper.  Rent level relative to land and building costs is key to retail districts renewal. 

The turnover rent tenancy model has potential as a “shared pain and shared gain”, retail leases basis for Hawke’s Bay and elsewhere in NZ.

Turley & Co turnover rent leases press link

 

UK article 7 May on retail turnover leases:

Growing retail crisis reignites debate over turnover leases

By Jessica Newman, Sebastian McCarthy | Thu 7 May 2020

 

“The already tense relationship between retail landlords and tenants deteriorated further when the government temporarily banned landlords from taking legal action against occupiers over attempts to slash rents or take payment holidays.

Landlords slammed the new legislation, which will last until 30 June, claiming that some occupiers would just try to exploit the rules to avoid paying rent.

But retailers say they need such protection if they are to survive, and some are now going further and reigniting the debate over the very nature of the retail lease itself.

“The old leasing model is finished,” Michael Murray, Mike Ashley’s property chief and future son-in-law, told The Sunday Times. “We need to move to a modern one based on turnover, which reflects the decline on the high street.”

So will Covid-19 do what the retail crisis has so far failed to and prompt a fundamental rethink of the retail lease – or will the debate last only as long as the lockdown?

For many retailers, the lockdown has already been the last nail in the coffin. Last week, the Oasis and Warehouse Group confirmed it is to close all its stores and online retailing with the loss of more than 1,800 jobs. The likes of Laura Ashley, Debenhams and Cath Kidston have also fallen into administration and closed swathes of stores as a result of lockdown.

Retailers on shaky ground

Several others appear to be on shaky ground. Mobile phone retailer Carphone Warehouse has shut all its stores and John Lewis (pictured) says it may not reopen all of its stores after the lockdown.

With so many high-street stalwarts fighting for survival, retail expert Richard Hyman thinks the move towards more turnover-based rents will “definitely happen”.

“I don’t think landlords have a lot of choice. Twelve months ago, we’d have said there is a Premier League of landlords, and right at the top you’ve got floor space that will always be in demand. I don’t think any floor space will always be in demand after this crisis.”

“Having turnover-based rents doesn’t mean you have leases with break clauses every week, but that leases are flexible for both parties. The question is, will the bloodbath force people to do things or will people sit down and work out a more positive kind of trading relationship?”

Even if they did plump for the latter approach, many landlords are not convinced it would work.

Turnover-based rents are a noble thing to ask for but difficult to achieve

Martin Roberts, Addington Capital

Martin Roberts, principal and co-founder of Addington Capital, which owns several UK shopping centres including Charter Walk in Burnley and The Harvey Centre in Harlow, says: “It’s a noble thing to ask for but is very difficult to deliver. For example, retailers tend to be reluctant to share sales figures with us, so how would it work?”

Roberts says any change in the leasing model is likely to require a framework agreement between the British Retail Consortium, on behalf of retailers, and the British Property Federation, acting for landlords.

“If you could get buy-in from the top 10 landlords and top 20 tenants, you might have the momentum to get that moving,” he says.

The chief executive of the British Property Federation, Melanie Leech, also has her own concerns. “In many cases lenders, property owners and their tenants are already working together to find solutions, which may include measures such as turnover-based rents,” she says.

“However, this requires a true commitment to partnership and transparency where retailers are open and willing to share their financial data.”

The new stresses being put on the landlord-tenant relationship certainly don’t help. But difficult though a transition to turnover-based rents may be, the terrible impact of Covid-19 could well give retail landlords no choice.”

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50 Public Land Projects for 7 Councils + Crown

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists. 

 

Currently 50 Public Land Projects for 7 Councils and The Crown

Turley & Co currently has over 50 property projects for 7 Council clients located from Hawke’s Bay to New Plymouth – and across the North Island.

Contact us for Council and Crown public land property assistance: land status and history, portfolio and leasing strategies, valuations, acquisitions and disposals, road gazettal legalisations, reserve land revocations and more.

LINZ Accredited for public land statutory actions since 1998 including the Public Works Act 1981.  Turley & Co was appointed this week by a Crown agency to lead and manage with real estate agency employed by us, the sale of 5 Crown land former reserves under LINZ and Land Act 1948 requirements.

Our experience includes 17 years Office of Treaty Settlements landbank sole provider NZ-wide and over 450 acquisitions; Crown land former reserves statutorily compliant disposals Manawatu and monthly road gazettal legalisations.

COVID-19 | Premises No Access in Emergency Rent Relief

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists. 

 

COVID-19 Premises Emergency Rent Relief

Contemporary commercial-industrial leases contain a ‘No Access in Emergency’ clause (27.5 or similar):

If there is an emergency and the Tenant is unable to gain access to the premises … then a fair proportion of the rent and outgoings shall cease to be payable for the period commencing on the date when the Tenant became unable to gain access to the premises to fully conduct the Tenant’s business from the premises until the inability ceases.

A lease may enable tenant and landlord activation of market rent reviews and some leases provide for rent reductions.

Contact us for lease strategy and market rent valuation advisory.

Our experience includes over 350 resolved or arbitrated commercial property rent valuations including in 2019, annual rents circa $1m at Hamilton and New Plymouth, and the new $20m Hastings Health Centre development advisor and valuer.

And refer to news post: Retail Property Focus© Hawke’s Bay | April 2020

Retail Property Focus© Hawke’s Bay | April 2020

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists.  Our People.  Property economy analysts and commentators – for Press.

 

Turley & Co Retail Focus© Report

Download free report:

Radio New Zealand property news audio 22 April

Since our Q3-19 survey 6 months ago, the overall Hawke’s Bay mainstreets’ vibrancy situation is unchanged at 93% occupancy – shop numbers increased by 1 and vacancies were elevated by 2.

Government subsidy and stimulus packages will assist mainstreet retailers to financially pull through the pandemic, and the economic aftermath may not be as bad as feared. In the current age of online shopping, most retailers operate a dual strategy with physical stores combined with online virtual retail. Retailers will be looking to boost their online presence and think outside the box for ways to operate under lockdown rules.

Team Turley & Co is picking that Government money flows combined with retailer and hospitality innovation, and more people shopping local; will help underpin a Hawke’s Bay town centres’ rapid recovery … [refer to PDF report for more]

And news post: COVID-19 | Premises No Access in Emergency Rent Relief

And late 2018: CBDs Are Social Centres | A Hastings’ CBD History | BayBuzz Magazine

RNZ News Commercial + Retail Property

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists.  Our People.  Property economy analysts and commentators – for Press.

 

Retail + Commercial Property Audio

The following Radio New Zealand news item aired at 6.53 am on 22 April.  It offers retail property insights and commercial property value projections:

RNZ audio 4’ 54” commercial property item starts at 02:16

And refer to our news post: Retail Property Focus© Hawke’s Bay | April 2020

Acquisition Property | Client Vineyard and Stonefruit Tenant/s Required

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists.  Our People.  Property economy analysts and commentators – for Press.

 

Client Vineyard and Stonefruit Tenant/s Required

Turley & Co recently assisted Heretaunga Tamatea Settlement Trust with its acquisition of 22.5 ha at 238 Stock Road, Hastings.  To lease 8.1 ha of stonefruit or 8.5 ha of vineyard please contact Liz Munroe, Chief Executive, HTST:

Mobile (027) 443 9778 and email liz.munroe@heretaungatamatea.iwi.nz

HTST is seeking Expressions of Interest from tenants to lease the stonefruit and vineyard blocks together or separately.  The stonefruit block is approx 8.1 ha consisting of 4.3 ha peaches, 0.5 ha nectarines and 3.3 ha plums.  The vineyard is approx 8.5 ha consisting of 1.8 ha Syrah and 6.7 ha Merlot.

Congratulations Nikki Whelpton on 5 Years!

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists.  Our People.  Property economy analysts and commentators – for Press.

 

Celebrating 5 years at Turley & Co

On behalf of our very grateful team: congratulations Nikki Whelpton on celebrating 5 years at Turley & Co.  Thank you Nikki and great work!

You have made and continue to make an awesome and dedicated contribution to Team Turley & Co and for our clients!

LinkedIn congratulations post

Lockdown: Turley & Co Fully Operational

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists.  Our People.  Property economy analysts and commentators – for Press.

 

Lockdown Period – news post 26 Mar

Firstly, we hope that you and your whānau are keeping well and remaining safe.

Turley & Co directors are manning our usual offices 300 metres from their same rural address home. The rest of our team are using 365, other cloud software, and Turley & Co secure terminal server RDP remote access to client project files (all digital since 2003).

Please contact us for a video call: Microsoft Teams, Zoom and other platforms:
Skype – pat.turley.01
WhatsApp
FaceTime

We were well-prepared for business-as-usual. Turley & Co was seamlessly operational within the constraints of the lockdown (within a day). Our secure terminal server enables RDP remote access to client and project files that are all digital since 2003 (our very long-running contingency platform).

Our home office team is operating with RDP full access to client files and unlimited broadband.

Turley & Co people are working closely collegially as usual by audio and video calls, augmented by Microsoft Teams including online chat.

We are networking and collaborating as usual with our large office international firm partners. We will continue to gather and provide relevant information for supporting our clients to manage their property decisions in these challenging times.

If you have any questions, or if you would like to share marketplace experiences, please don’t hesitate to contact any of our team. We are available as usual and including virtual coffee meetings, and exchange.

We look forward to working with you and supporting you in the future.  Take care!

By Team Turley & Co.

2H19 | Commercial-Industrial Reports | Issue #30

Registered ValuersRegistered Property ConsultantsLINZ Accredited.  Hawke’s Bay-based premium quality valuation and creative property strategy© leading $0.5B acquisitions-disposals NZ-wide since 1998.  Valuation litigation and commercial property specialists.  Development and public land specialists.  Our People.  Property economy analysts and commentators – for Press.

 

Turley & Co free access two-page market indicator reports:

Prior reports: indicator reports and 1H19 full reports

Other free information: property market metrics

Napier demolition the largest ‘in living memory’ | NZH | HBT

The demolition of Napier City Council’s former Civic Building on Hastings Street is probably one of the largest in living memory.  The building was abandoned in 2017 after it was found to be earthquake prone.

Turley & Co was a contributing commentator for the Hawke’s Bay Today video and print story:

NZH | HBT | 25 Feb 20 | Local Focus: Napier demolition the largest ‘in living memory’

Turley & Co press.

 

Other Turley & Co press here

Potts International Track & Field Meeting | 200m Mens Dash Sponsor

Turley & Co is again a proud sponsor of Hawke’s Bay’s annual premium NZ and international athletics Potts Classic track and field meeting. It gets underway on Wednesday January 22nd with indoor pole vaulting and on Saturday at the Sports Park. The meet is a festival of top-end athletics.  HBT press links x7 below and event photos gallery.

Details:

Event Photos Gallery | FB

Hawke’s Bay Today Press:

Sprint sensation Eddie Osei-Nketia to headline Potts Classic in Hastings

Zoe Hobbs adds to star-studded cast at Potts Classic in Hastings

Long-term consistency trumps Tokyo Olympics for pole vaulters 

Easy does it for Eliza McCartney but Tokyo Olympics still goal 

Coach Dale Stevenson helps Tom Walsh come up with new concepts

Tom Walsh starts journey at Potts Classic to remove bitter taste

Playful Dame Valerie Adams books date with Tokyo Olympics

 

Napier-Hastings housing now ‘severely unaffordable’ | HBT

A “perfect storm” has hit housing prices in Napier and Hastings to the point where it is now classified as ‘severely unaffordable’.

Turley & Co was a contributing commentator to the HBT story:

Hawke’s Bay Today | 21 Jan 20 | Napier-Hastings housing now ‘severely unaffordable’, in top six least affordable cities in NZ

Turley & Co press.  NZH – paid subscriber access.

 

Paharakeke/ Flaxmere | Turley & Co | BayBuzz Magazine | Jan 20

The magazine is in shops and the article is available on the BayBuzz website.  Turley & Co is a volunteer writer – prior articles listed below.

Turley & Co press here

Flaxmere Article 
Flaxmere’s house value appreciation over 15-20 years has outperformed some coastal and urban locations for Hawke’s Bay.

In 1998, Flaxmere recorded 27 house sales equating to 2.3 per month and a total value of $2.2m.  In 2018 transactions were 237 or almost 20 per month summing $56.1m. In 2018 the median house sale price was $230,000 – up 156% in 20 years with growth highest since 2003.

Turley & Co’s 15-years 2003-2018 study measured Flaxmere’s median residential property value change at 142% or 6.1% per annum compound.  Flaxmere’s annualised value growth outpaced residential property over the 15 years for Napier Hill (3.2%), Mahia beach (3.3%), Bay View (4.1%), Westshore (4.4%), Taradale flat areas (5.5%) and Waimarama (5.7%).

The 2019 three-yearly Rating Valuation reassessment for 2,976 residential rating units at Flaxmere reflects average Capital Value of $307,100.  The Flaxmere RV has risen 67% compared to district-wide residential RV increase 43% 2016-19.

Mountains of hard work has converged, yielding the iwi-led ground-breaking Waingākau Village, the Kimi Ora Community School culture-focused redesign, town-centre and community facilities betterment (as promised by Hastings Council) and St Andrews’ solar electricity project.

Refer to the article for more …

Other BB Articles by TCL
Other Turley & Co articles for BayBuzz:

Could Hastings have an ‘eat street’? Heretaunga St East is showing all the signs

“The strong Hawke’s Bay economy is being reflected in its retail centres with Hastings now in particular experiencing a revival in its hospitality scene, according to the Turley & Co November Retail Focus survey.”

Hawke’s Bay Today | 26 Nov 19 | Could Hastings have an ‘eat street’? Heretaunga St East is showing all the signs
Turley & Co press.  NZH – paid subscriber access.

 

Hastings Alive! City Centre Revitalisation Newsletter for HDC full details

Turley & Co Retail Focus© Report | November 2019 for more information

Retail Focus© Hawke’s Bay | November 2019

Turley & Co Retail Focus© report below and Press plus link for HDC newsletter full details:

Access free report:

Hawke’s Bay hospitality occupancy has increased 2015-19 for all prime mainstreet locations surveyed: Napier, Taradale, Hastings and Havelock North.  Food & Hospitality account for a quarter of shops occupancy in both Havelock North and Taradale.  Our other talking points for this report are:

  • Shops occupancy improved/ vacancies down
  • Retail spending up
  • HB economic conditions buoyant
  • CBD revitalisation and vibrancy initiatives afoot

 

Turley & Co published in late 2018: CBDs Are Social Centres | A Hastings’ CBD History | BayBuzz Magazine

Maraetōtara Tree Trust native trees releasing with sponsors Unison, David Trubridge & Turley & Co

Turley & Co people working on trees at the Maraetōtara River 14 Nov 19 – Pat Turley, Nikki Whelpton and Dayna Campbell (absent Wayne Smith and Sue Turley):

       

Maraetōtara Tree Trust people with river project sponsors Turley & Co, Unison Networks and David Trubridge Ltd staff volunteered time releasing young native trees at Maraetōtara river – 30 people turned out.

Unison entered a three-year partnership with MTT in July this year, joining the whānau restoring the Maraetōtara River for 17 years.

David Trubridge’s company is a key sponsor of Maraetōtara Tree Trust since 2014

Turley & Co is Maraetōtara River restoration project original permanent sponsor since 2006.  Pat Turley is volunteer Trust Board Chair for Maraetōtara Tree Trust since 2014.

Maraetōtara Tree Trust has 17 years of credibility planting up to 15,000 native trees and plants every year.  Of 86 kms river both sides, 33 kms is reserved and planted – at least 33 hectares planted with at least 150,000 native trees so far!

The Maraetōtara River restoration project involves the whole community.  It is possibly the longest established project of its type in NZ and possibly the only whole river project.

MTT digital platforms Website | Facebook | Instagram | LinkedIn | Give-A-Little

P Turley LinkedIn post for MTT

Maraetōtara Tree Trust win the Supreme Award from Hastings Landmarks Trust | Aug 19

Bellwether Industrial Sale New Plymouth ➝ 5.58%

Colliers IM PDF for investment sale:

Cap rates continue to harden influenced by mega-low interest rates and masses of investment capital chasing good attributes commercial-industrial property.

The latest regional bellwether sale is at Bell Block New Plymouth – price $3,105,000 / 5.58%, for a 10 years lease to Asmuss at 82 De Havilland Drive.

Congratulations to Benet Carol and colleagues at Colliers.

LinkedIn post 11 Nov 19

Pat Turley photos 30 October:

Coastal property values reflect climate change | Turley & Co | BayBuzz Magazine | Nov 19

The published article is available on the BayBuzz website.

Hawke’s Bay’s coastal strategy has become a pressing topic. Storm surges have wreaked spectacular havoc at Clifton beach, coastal Te Awanga and Haumoana. Hohepa www.hohepahawkesbay.com has decided to retreat from low-lying land near Clive for its 60 residents’ safety. The Hohepa relocation to Poraiti will take five years and is budgeted at $10.5 million.

A 15-year coastal property study conducted by valuers and land economists Turley & Co, shows that many Hawke’s Bay coastal locality property values have performed well, but several inland urban locations have performed better.

“The rate of value growth for relatively scarce Hawke’s Bay beachfront property has generally not – as might have been be expected – outperformed more abundant inland competitors.”

P Turley LinkedIn post for article