South Wales Report 2016

March 2016
South Wales Report 2016
Introduction
I would like to welcome you to this, our 21st annual report
on the South Wales property market. This report has now
become a leading research document on the property
market in Wales and I would like to thank the many
colleagues who have contributed to its publication over the
years.
The past year has seen a continued improvement in the
UK economy, notwithstanding the occasional headwinds.
There has been an increased political focus across the
UK around regional devolution and this has been reflected
in the improved performance of our major regional cities,
including Cardiff.
In South Wales we have experienced a welcome increase
in occupational demand, accompanied by an extraordinary
performance in the capital markets. In addition, in the
development sector, we have also seen a return of
construction cranes to the skyline of Cardiff city centre and
the wider M4 corridor.
The city centre of Newport has been reinvigorated,
following the opening of Friars Walk Shopping Centre
whilst the appointment of preferred developers for two
key sites in Swansea city centre bodes well for the
regeneration of Wales’ second city.
The extraordinary performance of capital markets
Contents
Introduction
The economy
Capital markets
Industrial & logistics
Offices market Retail market
Residential
Planning
Business rates
Contacts
3-5
6-7
9-11
13-15
17-20
21-23
25-27
28-29
30-31
32
In 2014, we reported that the strength in the investment
sector had led to Wales’ ‘strongest ever’ performance.
However, in 2015, total volumes exceeded £1bn, well
ahead of the previous year’s record of £0.655bn.
Investor demand for office stock in Cardiff led the way
although the largest lot sizes were, again, out of town
retail parks. The McArthurGlen Designer Outlet, Bridgend,
sold for £115.5m, with the sale of Morfa Shopping Park in
Swansea following close behind at £83.5m.
Increased activity in the occupational markets
Across both office and industrial markets there has been
steady demand from Grade A occupiers, with 2015 being
a year characterised by quality over quantity.
In Central Cardiff Enterprise Zone (CCEZ) the
confirmation of the 150,000 sq ft letting to BBC Cymru
Wales was the headline act. However, in the supporting
cast were lettings to Public Health Wales, Deloitte, Blake
Morgan and Julian Hodge Bank. The list of enquiries for
Grade A floorspace is substantial, not least the potential
300,000 sq ft HMRC relocation to the city centre.
In response to this demand, we have seen significant
private sector development activity led by JR Smart and
Rightacres, the latter now in a joint venture with Legal &
General’s Regeneration Investment Organisation (RIO)
Partnership.
In the industrial markets, the inward investment projects
by General Dynamics and Essentra were the stand out
transactions. The decision by Aldi and DPD Geopost
to develop in excess of half a million sq ft of high bay
warehousing across two schemes in Wentloog illustrated
the economic impact of new urban logistics projects - and
the need for strategic planning in this regard. Finally,
speculative development has returned, this time by St
Modwen at Celtic Business Park, Newport.
However, there have been challenges and the global
pressures on the steel industry have, understandably,
impacted upon Port Talbot and South Wales in general.
South Wales Report | March 2016 | 3
Devolution
Following the St David’s Day ‘Agreement’ in 2015, the
draft Wales Bill seeks to bring clarity to those areas which
are devolved or not. The drafting of this bill continues to be
debated.
However, for the business community, there is arguably
a call for greater political focus upon fully exploring and
maximising those powers already devolved to Wales.
These already include education and skills, infrastructure,
planning, public services, economic development as well
as the four so-called devolved minor taxes (business
rates, stamp duty, land fill tax and aggregates levy).
In July 2015, the Planning (Wales) Act received royal
assent, marking a major achievement for Welsh
Government. The Welsh Government must now ensure
this Act is delivered in full, to achieve the step change in
planning performance that Wales requires.
Cardiff capital region, metro and a city deal
The Cardiff Capital Region (CCR) covers 10 local
authorities, has a population of 1.5 million and Gross
Value Added (GVA) of approximately £25 billion,
accounting for 51% of the Welsh Economy.
In the spring of 2015, the CCR Board reported its vision
and strategy for the region. This built upon the changes
in regional planning, the proposed reorganisation of local
Government (following the Williams Commission) and
the creation, by Welsh Government, of a ‘not for dividend’
transport subsidiary to be known as ‘Transport for Wales’.
“The key arguments for a city region
approach are based around the benefit
that can arise through scale, shared
risk and reward and efficient and
co-ordinated investment decisions”
The CCR Metro proposals seek to integrate heavy rail,
light rail and bus rapid transport into a seamless network
to provide a high frequency mass transit network. There
are real opportunities to extend the network across
the region as well as to provide a catalyst for new
development and regeneration.
In terms of funding, the proposals for a £1.28 bn City Deal
for CCR, and potentially an additional deal for Swansea
Bay, emerged in spring 2016 with a target deadline of the
March 2016 budget.
A positive outlook
We have benefitted from an improved economic picture
in 2015 which has provided increased confidence from
investors, occupiers and developers. We have seen rental
and capital growth across South Wales although with a
focus upon Cardiff and the M4 corridor.
Cardiff has become the driver of economic activity for the
wider city region and, indeed, the whole of Wales. The
challenge is to now harness this growth. This will require
the more strategic focus afforded by the governance
envisaged by the Cardiff Capital Region and the long term
investment funding afforded by the City Deal.
­ e can achieve this through delivering the key
W
infrastructure projects of the M4 Black Route and
Metro. The M4 around Newport remains congested and
unreliable. The UK Government has offered borrowing
powers to facilitate a new southern M4 relief road and the
Welsh Government has chosen the so-called ‘black route’.
JLL has been at the forefront of the business community in
continuing to press for the early delivery of this scheme.
In addition, further strategic planning work is required
to create an updated network of key employment sites
whilst Welsh Government must incentivise investment
in new development to address the shortage of Grade
A employment buildings. As always, the property sector
stands ready to work with Welsh Government to create a
more robust Welsh economy.
Source:
Cardiff Capital Region – Powering the Welsh Economy
Chris Sutton
Lead Director - Cardiff
South Wales Report | March 2016 | 5
The economy
Solid outlook for the UK & Wales despite global risks
After a sustained run of strong growth in the UK economy,
2016 has begun with downgrades to estimates of the
recent pace of growth and renewed concerns over the
outlook for global growth. This has been reflected in
equity market turmoil, a plunging oil price and speculation
as to whether China and other emerging markets will
experience financial instability in response to capital
outflow associated with the US Federal Reserve’s decision
in December to embark on base interest rate rises.
While the recent uncertainty has the potential to dampen
business sentiment, and the upcoming referendum on
EU membership also creates uncertainty, economic
fundamentals for the UK remain sound. With solid growth
of 2.2% in 2015, a similar pattern is expected in 2016
and the UK remains one of the fastest growing major
economies, supported by low unemployment, the robust
expansion of the services sector and steadily improving
household spending power.
THE UK OUTPERFORMS
ALL OF WESTERN EUROPE
GROWTH
2.2%
in 2015
USA
GERMANY
EUROZONE
FRANCE
JAPAN
2.0%
1.7%
1.6%
1.4%
0.8%
The global outlook is also for continued growth, although
it will remain a mixed picture, with improving growth in
Europe offsetting downgrades to emerging markets.
The Governor of the Bank of England’s ‘elegant swerve’
in his recent guidance on interest rates in part reflects
concern that the turmoil in the global markets could have
on the UK. The consensus is now pushing back the first
expected rate rise since 2008 to Q4 2016 at the earliest,
and this will keep long term rates at low levels.
At a local level, Wales has performed strongly over the
past five years, averaging GDP growth of 2% per annum
between 2011-15 and the region is expected to see its
economy continue to advance by 1.8% per year over
the period 2016-20. This expansion will be led by Cardiff
where GDP is forecast to grow by over 2% annually
over the next five years, where improving infrastructure,
such as the electrification of the Great Western mainline
to London and significant investment in the city’s digital
infrastructure will assist the business environment in the
future.
2016-2020 GDP GROWTH
CARDIFF
WALES
1.8%
PER ANNUM
A buoyant labour market
Real wage growth supporting retail sales
The labour market continues to strengthen and
unemployment is now at record lows, with UK
unemployment falling to 5.1% in the three months to
December 2015, its lowest level since 2005. This pattern
has been reflected in Wales with the unemployment rate
falling to 5.5% as at the end of 2015, the lowest level since
Q2 2008.
Consumer spending across the UK has remained buoyant
and is a key driver for economic growth. Retail sales have
risen for 33 consecutive months, moving up by 5.2% in
the year to January 2016.
This expansion has been driven by the private sector
where employment levels grew on average by 2.9% per
year over the past five years, with Cardiff in particular
seeing strong growth from the financial and insurance
sector, which has expanded by 5.9% per year over the
same period. Cardiff has developed as a location for
the banking and finance industry and this is highlighted
by companies such as Deloitte and Admiral Insurance
recently expanding their operations within the city centre.
Looking ahead, Wales is forecast to see a continuation of
steady private sector job growth of 1.1% per annum. This
positive expansion of private sector employment will boost
the office leasing market as occupiers will require larger
premises as employee numbers grow.
Strong retail sales have been supported by real wage
growth. The private sector is driving wage growth across
the UK, with average earnings increasing by 1.7% over
the 12 months to December 2015, and in conjunction with
sustained low inflation, real wages are now rising.
E-commerce boosts urban logistics
The rise in retail sales has resulted in growth in the
e-commerce sector across the UK. With employment in
the Transport & Storage sector in Wales set to rise over
the next five years, this expansion should boost demand
for space in the urban logistics market. Operators will
require different types of logistics facilities as retailers,
parcel operators and logistics companies respond to an
increasingly competitive retail distribution sector.
2.1%
PER ANNUM
Ben Burston
UK Research
South Wales Report | March 2016 | 6
South Wales Report | March 2016 | 7
Capital markets
WALES
INVESTMENT
VOLUME BEYOND
£1bn
in 2015
• Wales was a standout performer with 2015 investment
volumes pushing beyond £1bn for the first time
• Improved liquidity in the office market led to a dramatic
increase in activity in South Wales
• The UK corporate real estate (CRE) investment volume
reduced in 2015 to £61bn
• Over the last quarter of 2015 it was evident that the UK
investment market was cooling slightly
• Alternatives continued their growth in popularity
The UK CRE investment volume reduced in 2015, ending
three years of significant growth. Total CRE investment for
2015 was £61bn, down 8% from a record breaking 2014 but
still well above the 10-year average.
Over the last quarter of 2015, it was evident that the UK
investment market was cooling slightly, although this overall
slowdown conceals very different performances by sector
and region. Offices were the most sought after asset class
in the UK with a 42% share of all CRE investment. The
capital chasing alternatives also continued to rise and made
up approximately 24% of the total market. The market share
afforded to retail and industrial properties remained relatively
static, with portfolios again accounting for a significant and
growing proportion of the total volume.
South Wales was a standout performer, as investors
searched out value. In contrast to the overall UK picture,
the first half of 2015 was relatively subdued in South Wales
due to a scarcity of stock but Q3 and particularly Q4 were
extremely busy periods.
In 2015, the total volume in Wales grew dramatically pushing
beyond the £1bn milestone, 27% ahead of the previous
record set in 2014. Following the national trend, offices
were in the spotlight with dramatic growth from 20% in 2014
to 37% of the total 2015 Welsh volume. Based on total
volumes, retail remained the dominant sector in the region
underpinned by a number of large transactions, albeit retail’s
market share reduced to approximately 40%, circa 8% below
its peak in 2014.
The CRE debt market has become highly liquid with the
greatest number and variety of lenders there has ever
been. Debt origination was in the region of the £52-£57bn
for the full year in 2015, compared to £45bn in 2014. This
represents the best single year of origination since 2007
and indicates a debt market that has now reached a point
of stabilisation and that should mean continued good debt
availability across the UK market in 2016.
Industrial
A significant proportion of the multi-let industrial stock in
South Wales is held between a small group of large scale
owners including M7 (Goldman Sachs), Dunedin & Brockton,
M&G, IPIF and Hansteen. Relatively few individual estates
or single-let units traded in 2015. Key transactions were:
• Magellan Court, Ocean Park, Cardiff – Acquired by
Schroders from Kildrummy Property Ltd in August 2015
for £2.35m, reflecting 7.13% net initial yield.
• Smurfit Kappa, Abercarn – A single let industrial unit of
131,228 sq ft on 13.89 acres. Sold by Receivers in July
2015 for £1.8m, equating to 13% net initial yield.
• Hansteen West and Mid-Wales Portfolio – Five multilet estates sold in mainly individual sales of lot sizes up
to £1m, at net initial yields of between 9% and 10%.
Industrial portfolios remained an important part of the market
in 2015 and those sold with assets in South Wales include
the Hansteen UK Industrial Property Unit Trust II (HPUT2)
acquired by Brockton Capital LLP in a partnership with
Dunedin and the FIX Trade Park Portfolio bought by IPIF.
South Wales Report | March 2016 | 9
Offices
Retail
An imbalance between supply and demand was
addressed in 2015 following the release of a number of key
assets across the region and the unblocking of Cardiff’s
development pipeline. A strengthening occupier market,
rental growth and tightening secondary supply have all
helped to drive demand. There has been improved liquidity
and the buyer spectrum is wider than ever including: the
main UK institutions, larger property companies, private
equity and overseas investors (US, European, Middle
Eastern and Asian). Over the back end of the year we did
however see a more cautious approach adopted by some of
the main UK funds. Key transactions included:
The last two years has seen extremely strong investor
demand for prime retail. Whilst liquidity has improved there
has not been significant upward pressure on secondary
yields, particularly at the lower end of the market. As
demand for prime shows no sign of abating, the effect is an
exaggerated polarity between prime and secondary yields,
which are already spread well above long-term average
levels. Key highlihgts included:
• Helmont House, Churchill Way, Cardiff – Acquired by
Lancashire County Council Pension Fund in June 2015
from Bishop’s Gate Pension Fund for £34.6m equating
to 6.1% net initial yield.
• Ty Admiral, David Street, Cardiff – Sold by Union
Investment to Amundi as part of a €1 billion transEuropean portfolio. The apportioned pricing was
£69.41m reflecting 4.68% net initial yield.
• Central Square, Cardiff - L&G has invested into
Rightacres’ and Cardiff Council’s 1.4m sq ft master plan,
situated in front of Cardiff Central Station. The first phase
includes the 150,000 sq ft Foster & Partners designed
BBC Wales HQ and a speculative 135,000 sq ft office.
Seven further phases will follow comprising a mix of
commercial and residential buildings, with a predicted
£400m total investment over five years.
South Wales Report | March 2016 | 10
The biggest challenge for the South Wales CRE investment
market is the scarcity of good quality stock and increased
development activity is required.
• Windsor House, Cardiff – Empiric Student Property
provided a forward commitment on a 314 bed student
residence comprising a mix of studios and two bed
apartments with communal facilities. The price on
completion is £40m, reflecting 6% net initial yield, with a
first year guarantee on a direct let basis.
Single asset sales are expected to increase in 2016 as
private equity firms asset manage their portfolios. While
some look to dispose of non-core assets, others may
selectively add to portfolios through single-asset purchases.
The UK market is looking more attractive relative to Europe
and will remain the number one destination for foreign capital
due to it being the most liquid and transparent CRE market
in the world.
• Morfa Shopping Park, Swansea – An open A1, out of
town shopping park. Ashby Capital acquired from The
Crown Estate for £83.5m reflecting 6.0% net initial yield
in December 2015.
• McArthurGlen Designer Outlet, Bridgend – A multi-let
outlet village with 90 occupiers and anchored by an
Odeon cinema, Next, GAP and Marks & Spencer. M&G
acquired from TH Real Estate for £115.5m, reflecting a
net initial yield of 5.75%.
• 43-45 Queen Street, Cardiff – A prime, high street retail
unit let to Matalan with 14 years unexpired. Sold to a
German fund in November 2015 for £19.84m equating
to 4.75% net initial yield.
Alternatives
Student housing, hotels, leisure, healthcare and PRS made
up an increased share of investment volumes in 2015.
Student housing witnessed another stellar year with UK
transaction levels at over £5.5bn but we expect investor
consolidation and volumes to reduce in 2016. Pricing
remains strong for long-dated income streams with demand
from multiple sources, particularly for leased hotels but there
is an increasing focus on the other alternative sectors.
• Merthyr Leisure Village, Merthyr Tydfil – A multi-let
leisure park with nine units including a Travelodge and
VUE Cinema. Sold by Atlantic to L&G in November
2015 for £15m, reflecting 6.45% net initial yield.
One Central Square, Cardiff
• Premier Inn, SA1, Swansea – A 132 bed hotel with c.
21 years unexpired on the lease. Acquired by M&G for
£13.13m equating to 4.35% net initial yield.
• Newport Leisure Park, Newport – A multi-let leisure
park and retail redevelopment opportunity let to five
tenants including Frankie & Benny’s, Pizza Hut,
Harvester and Cineworld. Johnsey Estates sold to
Otium Leisure Fund in July 2015 for over £14m.
The rise of alternatives will continue in 2016, as more
institutional and overseas investors look at these growth
sectors. Long term inflation linked leases, strong demand
and supply dynamics and demographic tailwinds are
underpinning alternative sectors such as hotels, healthcare
and student housing.
Windsor House, Cardiff
Outlook
We anticipate a more balanced market in 2016. The weight
of money that has come into the market over the past 24
months has significantly outpaced the amount of stock
released, compressing yields and over-heating some
sub-sectors. We started to see a more balanced market at
the end of 2015, as more investors look to reposition their
portfolios for greater exposure to stronger rental growth
leading to more market churn.
Realignment between the occupier and investment markets
is expected. The investment market recovered much quicker
than the occupier markets post-recession, returns in 2016
will need to be driven by rental growth as occupier demand
improves, rather than yield compression.
After two years of +£60bn per annum investment volumes,
we expect a moderation in transaction activity as pricing
comes under pressure from interest rate rises, and investors
look to move up the risk curve at more value added and
opportunistic assets. In addition, severe stock market
volatility, heightened concern about China’s economy, falling
oil and other commodity prices and uncertainty about the
impending referendum on EU membership could all impact
on investor confidence.
Justin Millett
Capital Markets
South Wales Report | March 2016 | 11
Industrial & logistics
• Take-up is down on the 2014 high, although levels
remain healthy across all regions of South Wales
• Total availability has reduced – continuing the
downward trend since 2012
• Lack of Grade A space causing a rise in headline
rents and a reduction in incentives
• Urban logistics providing a driver for growth and new
development
• Inward investment projects by General Dynamics and
Essentra
• New build warehousing projects for Aldi and DPD
Geopost
• St Modwen commenced a speculative development
programme in Newport
At the end of December 2015, there was 11.39m sq ft of
floorspace available across Wales, a decrease of 9.7%
over 12 months and a remarkable reduction of 43.5%, or
8.81m sq ft, over three years.
The available stock of units over 100,000 sq ft totalled
3.99m sq ft, 11% down on 2014. This reflected continued
demand, combined with little additional stock coming to
the market. The available stock of units between 1,000
and 99,999 sq ft totalled 7.4m sq ft - a fall of 9.75% on
2014.
Available supply by size band (sq ft) – end of Q4, 2015
Supply & demand
1,000 - 4,999
9%
Around 3.59m sq ft of industrial floorspace was taken up
in Wales in 2015, of which 1.61m sq ft (45%) involved
units over 100,000 sq ft. Take-up was 22% lower than in
2014, although this was, in part, due to a lack of available
modern buildings.
8%
35%
13%
13%
10,000 - 19,999
20,000 - 49,999
14%
Wales industrial / logistics take-up
5,000 - 9,999
21%
50,000 - 99,999
100,000 +
5
4
3
2
1
0
2009
2010
2011
2012
2013
1,000 - 99,000 sq ft
2014
2015
100,000 sq ft +
Wales industrial / logistics availability (millions sq ft)
20
15
10
5
0
South Wales Report | March 2016 | 18
2009
2010
2011
2012
2013
2014
2015
South Wales Report | March 2016 | 13
Urban logistics
Wales has traditionally lagged behind Avonmouth, Bristol,
in terms of high bay distribution activity, not least due
to the tolling of the Severn Bridges and the unreliable
stretch of M4 north of Newport. However, in 2015, we
saw the development of two new cross-docked, high bay
warehouses in Wentloog, east Cardiff:
DPD Geopost – parcel carrier hub of 60,000 sq ft,
Wentloog Corporate Park, Cardiff.
Aldi – regional distribution centre (RDC) of 454,000 sq ft,
Capital Business Park, Wentloog, Cardiff.
The key transactions in south east Wales were:
Address
Size
Occupier
New build unit, Cardiff Docks
81,470
Travis Perkins
LH
Unit IP5, Imperial Park, Newport 278,100
Essentra Packaging
& Security Ltd
LH
Waterton Point, Bridgend
165,539
Owens Road Services LH
Ex Sims unit, Newport Docks
170,000
Speedy Hire
LH
Ex Carcraft unit, Newport
147,000
Formaction Ltd
(Propco)
FH
The standout industrial letting in 2015 was the letting of
Unit IP5, Imperial Park, Newport to Essentra, who already
occupied IP4 on this secure park. The letting, for a term
of 20 years, at a headline rental in excess of £4.00 per
sq ft, illustrates the demand for modern buildings located
adjacent to the M4.
Newport – Bridgend M4 corridor
The M4 corridor across south-east Wales remains the
prime industrial and logistics location with increased rents
and capital values. There is strong trade counter demand
on the main arterial routes into Cardiff with improved
demand in Newport.
There is now a severe shortage of new industrial
floorspace and, therefore, St Modwen’s decision to
speculatively develop a unit of 48,150 sq ft at Celtic
Business Park, Newport is a welcome move. Additional
phases are planned here, subject to market demand.
South Wales Report | March 2016 | 14
Unit IP5, Imperial Park, Newport
South Wales Valleys
The dualling of the A465 Heads of the Valleys trunk road
continues with Section 3 (Brynmawr to Tredegar) finished
in 2015. Section 2, from Gilwern to Brynmawr, is now
underway although is technically challenging. Sections
5 & 6, from Dowlais Top to Hirwaun, will then follow and
complete the project.
Merthyr Tydfil has secured two important inward projects
in the past two years. In the autumn of 2015, General
Dynamics UK acquired Linde Industrial Park, Pentrebach,
Merthyr Tydfil comprising 236,000 sq ft on a dedicated site
of 57 acres. GDUK will manufacture and service the Ajax
armoured vehicle for the British Army.
Swansea Bay
The downturn in the steel industry and associated job
losses announced at Tata’s Port Talbot steelworks
illustrates that Wales is not immune to global changes in
the economy.
Elsewhere in Swansea Bay, the emerging Swansea
Tidal Lagoon renewable technology project awaits the
resolution of a strike price for the proposed 240 MW
output. If this project can be secured then the construction
and supply chain opportunities would be significant.
LH - Leasehold FH - Freehold
Aldi Regional Distribution Centre, Wentloog, Cardiff
These developments follow on from the new 170,000
sq ft Bidvest RDC - which opened at Newhouse Park,
Chepstow in December 2014. Collectively, these schemes
illustrate the boost to the construction sector provided by
the logistics sector; for whom the existing stock of mainly
low eaves former manufacturing units are often unsuitable.
The previous occupier, Linde Heavy Truck Division
Ltd, agreed to leave an extensive package of plant and
machinery on site which has led to significant job creation
in the town. This transaction follows the letting of 165,000
sq ft in 2014 to Tenneco Walker Automotive.
The industrial market in the south west of Wales has
improved across all size ranges, particularly in the small
and medium size category. The larger units that have
traded in Swansea Bay are generally secondary in nature.
Linde Industrial Park, Pentrebach, Merthyr Tydfil
The Valleys are a complex market with significant
variations in market conditions, sometimes even within the
same valley. However, demand has improved leading to
increased rental and capital values. The sale of 25 acres
at Oakdale Business Park, Blackwood to IG Doors will
facilitate the construction of a new unit of 193,750 sq ft,
projected to create an additional 260 jobs.
This is indicative of the sort of project that can be
secured and there is now a case for protecting the best
employment sites within the Valleys for future projects,
as these come under pressure for alternative use
development.
The Heads of the Valleys has seen increased activity with
the following key transactions:
Address
Size
Occupier
Ex-Yamada unit, Festival Park
Ebbw Vale
53,400
Cwmtillery
FH
Unit 19, Rassau Industrial Estate
60,500
Envirowales Ltd
FH
Ex-Tata, Tafarnaubach Industrial 105,700
Estate
Outlook
The industrial property market continued its steady
improvement in 2015 with particular activity in the
energy sector, trade counter and urban logistics. The
attraction of major new-build logistics projects for Aldi
and DPD Geopost, together with the return of speculative
development in south-east Wales provides a road map for
future development activity.
Elsewhere in the region, the top tier EU grant status of
‘West Wales & the Valleys’ remains an attraction for UK
bound inward investment; however the lack of modern
buildings is a constraint which should now be a priority
for Welsh Government. The private sector should now
be incentivised through gap funding to deliver the right
buildings in the right locations.
Gerry Jones Transport FH
Dinas Isaf West, Tonypandy
49,500
FH
Ex- A G Barr, Tafarnaubach
Industrial Estate
Linde Industrial Park
Merthyr Tydfil
Welsh NHS Shared
Services
60,600
Zorba Foods Ltd
FH
236,000
In line with other regions of South Wales, there is a
need for modern floorspace of all sizes, most notably
for B1 innovation units on Fabian Way, close to the new
Swansea University campus.
General Dynamics UK FH
LH - Leasehold FH - Freehold
Chris Sutton
Lead Director- Cardiff
South Wales Report | March 2016 | 15
Offices market
• Increased take-up across all three cities with key
pre-lets in Cardiff
• Headline rents are on the increase and incentives
contracting
• Commercial balance shifting towards a landlord
driven market
• Occupier demand remains strong and a notable
increase in new companies targeting South Wales
• Further speculative office development proposed
to commence in 2016, although Cardiff is the focus
UK Office Rents
Cardiff
The end of year office take-up for 2015 was 617,000 sq
ft, which is a significant increase from the previous year of
542,500 sq ft. The high level of take-up is 34% above the
five year average of 462,000 sq ft.
There were four large transactions (20,000 sq ft plus),
totalling 262,000 sq ft, which reflects a similar level to the
previous year. However, 200,000 sq ft of this take-up
directly related to the BBC Cymru Wales and Public
Health Wales pre-lets.
£120 per sq ft
£100 per sq ft
£80 per sq ft
2 Capital Quarter Cardiff
£60 per sq ft
Cardiff take-up (sq ft)
700,000
£40 per sq ft
600,000
London West End
400,000
2015
2014
2013
2012
2011
2010
2009
2008
100,000
2007
200,000
2006
300,000
2005
London City
London Docklands
Manchester
Western Corridor
Birmingham
Bristol
Leeds
Cardiff
Newport
Swansea
£20 per sq ft
Glasgow & Edinburgh
500,000
0
Grade A transactions over the last 12 months (+5,000 sq ft)
South Wales Report | March 2016 | 18
Address
Occupier
Size - sq ft
Headline rent/sq ft or sale price
Date
3 Central Square
BBC Cymru Wales
1 Capital Quarter
Alert Logic
10,040
Not disclosed
December 2015
£19,.50
December 2015
Oakleigh House
First Source
2 Capital Quarter
Public Health Wales
19,514
£15.50
December 2015
51,652
£18.85
November 2015
Discovery House
1 Capital Quarter
First Source
5,754
£16.00
August 2015
Network Rail
9.744
£18.85
June 2015
6 Park Street
Deloitte
40,821
Not disclosed
June 2015
1 Capital Quarter
One Kingsway
Parsons Brinkerhoff
13,079
£18.95
March 2015
British Council
10,219
£20.00
April 2015
150,000
South Wales Report | March 2016 | 17
The out of town market experienced a dip in activity
compared to the previous year with the total out of town
take-up being 124,163 sq ft, which equates to only 20%
of total Cardiff take up from 49 deals. There were only
six out of town transactions exceeding 5,000 sq ft with
the largest letting relating to Powell Dobson Architects
acquiring 8,000 sq ft at Eastern Business Park in St
Mellons.
As expected, office availability has decreased in the
city centre to 800,000 sq ft, whereas the out of town
availability has remained consistent with the previous
year of 250,000 sq ft. Grade A supply remains limited to
45,654 sq ft (2 Callaghan Square, 1 Capital Quarter and
3 Assembly Square) in the city centre and 10,000 sq ft
(Vision Court, Pentwyn) out of town.
The development pipeline of circa 400,000 sq ft of new
office space was expected to increase the 2016 office
availability significantly, however this is no longer a
reality as nearly 90% is pre-let/ under-offer and older
second hand offices being removed from the market
for alternative uses. The key development pipeline
of schemes completing in 2016 are 3 Central Square
(150,000 sq ft), 1 Central Square (135,000 sq ft), 2
Capital Quarter (80,000 sq ft) and 2 Kingsway (40,000
sq ft).
Last year we predicted Grade A headline rents
increasing from £22.00 to £24.00 per sq ft for prime city
centre office accommodation. Although this was not
achieved for 2015, there were a number of deals under
offer in Q4 at this level, which will set a new headline
rent for 2016. Out of town Grade A headline rents
remained unchanged at £17.00 per sq ft.
Newport
Newport office take-up for 2015 was 130,000 sq ft, which
was consistent with the previous year of 120,000 sq ft.
Alcatel Lucent, Newport
The sale of the Alcatel Lucent building at Coldra
Woods (Junction 24 of M4 Motorway) was the standout
transaction in 2015, equating to approximately 50% of
total take-up, which was sold to Celtic Manor Ltd. The
other notable transaction was Qualifications Wales
who entered into a 10 year lease at £13.95 per sq ft for
11,000 sq ft at Q2 Imperial Park. These two transactions
were both out of town with the remaining office take up
reflecting a mix of city centre and out of town lettings and
sales below 3,000 sq ft.
Swansea - key office transactions over the last 12 months
Address
Occupier
Headline rent/sq ft or sale price
Date
Alpha Building, Matrix Park
University of Wales Trinity St David
Size - sq ft
28,253
£1.5 million
December 2015
Crucible Park
ERS Syndicate Management Limited
33,849
£10.00
March 2015
14-20 Orchard Street
Secretary of State
11,250
£8.50
March 2015
Alexandra House
Public Health Wales
9,050
£7.96
June 2015
Alexandra House
Tui/Thomson
7,249
£9.50
January 2015
The supply level has reduced slightly year on year,
to 308,000 sq ft, however lower headline rents and a
lack of development means that there is no available
Grade A office accommodation in the city centre. The
modern office availability comprises five out of town
office buildings, namely Quadrant House (30,000 sq
ft), Guinevere House (27,500 sq ft), Excalibur House
(11,750 sq ft), Oak House (15,000 sq ft) and Q2 (10,000
sq ft).
Good quality city centre supply is limited to one scheme
known as Langdon House at SA1, which offers a total
of 10,000 sq ft. The out of town market continues to
dominate the Grade A office supply with circa 50,000 sq
ft available at Crucible Park, Swansea Vale.
There are no recent examples of Grade A headline rents
for new city centre or out of town office accommodation;
however we anticipate the levels remaining stable at
£16.00/£15.00 per sq ft respectively.
Outlook
Swansea
Swansea take-up was 116,000 sq ft, which is a
significant improvement compared to the disappointing
level from the previous year of 60,000 sq ft. There were
five large transactions, which accounted for 90,000 sq ft
(nearly 80% of total take-up).
In respect of headline rents we anticipate the previous
levels for the city centre and out of town to remain stable
at £14.50 and £11.50 per sq ft respectively.
• Growth in headline rents with tightening incentive
packages
• Pre-let activity to continue with Cardiff being the
main focus
• Further speculative office development to
commence in 2016
• Demand to remain positive with a particular focus
from new companies entering South Wales.
The expansion of the TUi/ Thomson operation at
Alexandra House and the continuing growth of the
University of Wales Trinity Saint David is good news for
the city, however further inward investment is required to
drive the local economy.
2 Kingsway, Cardiff
Further city centre developments anticipated to
commence in 2016/ 2017, are being fuelled by the high
level of existing occupier demand. The anticipated
schemes include, 3 Capital Quarter (75,000 sq ft), 2
Central Square (135,000 sq ft) and potentially Callaghan
Square (100,000 sq ft), subject to Welsh Government
selling their existing land interest.
South Wales Report | March 2016 | 18
Q2 Imperial Park, Newport
Matrix Alpha, Swansea
Rhydian Morris
Office Agency
South Wales Report | March 2016 | 19
Retail market
• Online shopping continues to grow as retailers
benefit from providing customers with an ‘integrated,
seamless offer’ both online and in-store
• Discounters continue to grow their market share in the
supermarket grocery sector
• In November 2015 the new £117m Friars Walk
shopping centre, opened in Newport
• The City and County of Swansea appoint Rivington
Land and Acme as development manager for their
proposed city centre retail and leisure scheme
2015 was a strong year for the retail market and in
January 2016, JLL reported that over 80% of UK retailers
and leisure operators that disclosed their performance for
the 2015 Christmas period have registered positive like for
like (LFL) annual growth. 50% of these retailers delivered
LFL growth in excess of 4% year on year.
In the supermarket grocery sector the discounters were
the leaders, with Lidl and Aldi growing their market
share. Lidl grew the most out of all the grocery brands
with sales up by 18.5%. Three of the big names; Tesco,
Morrisons and Sainsbury’s are seeing improvements, with
Sainsbury’s being the best performer across the sector
with sales increasing 0.8%.
Online sales proved that there was continued room for
growth, and it was evident that retailers who demonstrated
they could provide customers with an ‘integrated,
seamless offer’ continued to benefit. Mobile commerce
continued to increase with Jigsaw and John Lewis both
seeing mobile sales increase 115% and 31% respectively.
Discount retailers such as Poundland, Primark, Sports
Direct, B&M and Bonmarché announced disappointing
results; all have limited online operations, in addition to
being susceptible to discounting elsewhere, and also
declining footfall across UK high streets.
Overall, web traffic on Black Friday was up 16% against
the previous year. Footfall dropped across the day by 8%.
This is perceived to be largely due to the negative press
of the shopping experience in stores in 2014. Key trends
have begun to appear including mobile web sales, (34%
of users shopped via mobile devices) and more brands
opting to continue the discounting over the weekend not
limiting it to the Friday.
Early in 2016, there have been two notable casualties
in the retail sector. In January 2016 Blue Inc confirmed
it would close a total of 52 Blue Inc and 22 Officers
Club stores as it ‘restructures for profitable growth’.
Blue Inc placed A. Levy (the subsidiary which holds its
leases) into administration after filing an intent to appoint
administrators earlier in the month. Blue Inc is expected
to keep its remaining 158 shops open and trading after
buying the leases out of administration.
In addition, Brantano UK collapsed into administration in
January 2016. Brantano was bought by Alteri Investors
in October 2015 but PWC confirmed it had experienced
‘difficult trading conditions’. They confirmed that Jones
the Bootmaker, also owned by Alteri, would remain
unaffected.
South Wales Report | March 2016 | 21
Cardiff
Leisure
Newport
There were a few notable lettings along Queen Street in
2015. HMV agreed a lease on the existing Evans store at
41 Queen Street, due to open in May 2016. Evans will be
exiting the city.
International brands continued to choose Cardiff as a key
destination as part of their acquisition strategy. The theme
was predominately burger chains with Five Guys opening
in early 2015 in The Brewery Quarter.
The HMV relocation enabled a letting to Wilko in its
old store of 53-57 Queen Street which comprises
approximately 20,000 sq ft over three floors. The recent
transaction to Wilko demonstrates a headline Zone A rate
of £230 per sq ft reflecting the current tone on Queen
Street.
Shake Shack, the New York city burger chain, chose
Cardiff as its first restaurant location outside of London
where it took 6,000 sq ft on the first floor of St David’s
Shopping Centre, opening in December 2015.
In November 2015 the new £117m Friars Walk shopping
centre, developed by Queensberry Real Estate in
partnership with Newport City Council, was opened by The
First Minister. The 390,000 sq ft scheme has been hailed
as a great success and is the centrepiece for the ongoing
regeneration of the city attracting an average weekly footfall
of 220,000 (30,000+/day).
St David’s Shopping Centre and The Hayes remain the
prime retail destination for the city centre. 2015 saw
H&M’s largest store outside of London open on the first
floor of St David’s. The 46,000 sq ft store is their first that
will stock their full lines including homeware. Prime rental
tone currently stands at £290 per sq ft Zone A.
The H&M relocation and upsize from The Hayes enabled
Intu and Land Securities to agree a letting with Michael
Kors.
Situated above a 350 space car park the scheme is
anchored by a 90,000 sq ft Debenhams store with a retail
offer comprising approximately 30 shops with national
brands including an M&S Foodhall, Next, River Island, H&M,
New Look, Topshop, Schuh, JD Sports, Jack and Jones,
Tiger and Mothercare.
The leisure offer is anchored by an eight screen Cineworld
with eleven restaurants including Pierre Le Bistro, Gourmet
Burger Kitchen, Wagamama, Prezzo, Chiquito, TGI Friday’s,
Frankie and Benny’s, Nando’s, Las Iguanas, and Loungers
Bar. The scheme also includes outlets for Coffee 1, Greggs
and Krispy Kreme and there is a Patisserie Valerie located
within the Debenhams store.
Additional retailers that opened in the scheme included
Kiko cosmetics and Swarovski (as part of a relocation),
Scotts (part of JD Sports) and Smiggle.
St Davids Retail scheme, Swansea
South Wales Report | March 2016 | 22
Headline retail rents currently stand at £110 Zone A with
restaurant rents at £27.50 per sq ft. New openings for early
2016 will include Holland & Barrett, Vodafone, Zizzi, Super
Bowl and New Look Men. The store will be the first New
Look Men in Wales and only the sixth to open nationally.
Swansea
Following an OJEU selection process the City and County
of Swansea has announced the appointment of Rivington
Land and Acme as its preferred development manager for
the former St David’s Shopping Centre and multi-storey car
park site together with the Leisure Centre car park south of
Oystermouth Road.
Their proposals include 200,000 sq ft of retail and leisure,
including a cinema offer, a residential tower, hotel and a
3,500 seat arena. The scheme will complement another
residential and leisure scheme proposed by Trebor
Developments to be built on the 20 acre Civic Centre site
fronting Swansea Bay. Improved links between the city
centre and the waterfront is a key element of the vision for
these major regeneration projects.
Paul Tarling
Retail
Charlotte Elstob
Retail
Friars Walk, Newport
South Wales Report | March 2016 | 23
Residential
• The low level of house building in 2015 in Cardiff is
WWset to increase significantly following adoption of
Cardiff LDP in February 2016
• Student housing driving city centre land values in
Cardiff and Swansea
• The return of city centre apartment schemes
2015 saw the much needed commencement of several
large schemes in South Wales, with further significant
sites due to come on stream shortly, helping to address
the scarcity of family housing, particularly in Cardiff.
Tai Tirion, a not for profit development company backed
by Welsh Government and Principality Building Society,
is progressing with the development of three major
South Wales sites. Each site will provide a high quality
environment with a mix of rental, shared ownership and
freehold homes.
Lovell will shortly commence construction of a 800 unit
scheme at Ely Mill in western Cardiff. Planning permission
was granted in October 2015 for 225 units at Coed
Elai in the Ely Valley, south of Gilfach Goch. A planning
application, yet to be determined, was submitted in June
2015 for 498 homes, a care home and a pub/ restaurant at
the Whitehead Works, Newport.
Outline planning permission was granted in November
2015 for Taylor Wimpey’s development of the BBC Wales
headquarters at Llandaff, Cardiff paving the way for BBC’s
relocation to Central Square. The site will provide up to
400 new homes in this prime residential location.
Major developments are currently underway in the
Newport area at Mon Bank, Glan Llyn (Llanwern) and
Rogerstone.
In Newport other schemes include the former Alcan site at
Rogerstone, with 1,000 houses proposed. The scheme, to
be known as Jubilee Park, will include a health and leisure
park and primary school. Bellway and Taylor Wimpey will
develop the first phase of 278 units combined.
The other major developments that are progressing
are Parc Derwen at Bridgend and Coed D’Arcy near
Swansea.
Welsh Government statistics for the period January 2015
to end September 2015 show housing starts (apartments
and houses) at Newport (685 units) closely followed by
Vale of Glamorgan (647 Units) both being substantially
ahead of Swansea (365 units) and Cardiff (334 units). Of
the Cardiff starts in this period, only 92 units were classed
as houses. (Please see table on page 26).
Residential development in South Wales continues to be
dominated by the big five (Taylor Wimpey, Persimmon,
Redrow, Barratt and Bellway), although mid-sized
developers in South Wales are increasingly active and
seeking to increase their geographical coverage outside of
their local areas.
Bellway is currently developing out a scheme of up to
243 homes at St Lythans Park, the site of the former HTV
studios at Culverhouse Cross.
South Wales Report | March 2016 | 25
Dwelling starts - South Wales 2015
Houses
Cardiff Local Development Plan (LDP)
Flats
The Cardiff Local Development Plan (LDP) has recently
been approved by the Welsh Government Planning
inspector and is forecast to be adopted in early 2016. Over
40,000 homes are proposed for seven strategic sites. The
largest sites will include this number of homes:
700
600
500
Newport
Monmouthshire
Torfaen
Blaenau Gwent
Caerphilly
Merthyr Tydfil
Cardiff
Vale of Glamorgan
Bridgend
Neath Port Talbot
0
Swansea
100
Pembrokeshire
200
Carmarthenshire
300
Rhondda Cynon Taf
400
Wales housing market
In the year-to-end November 2015 house prices in Wales
rose by 3.7% compared to 5.6% in England. The average
house price in Wales was £122,433 in November 2015,
which compares with £186,325 in England & Wales.
(source: Land Registry)
The number of development completions in the year to Q2
2015, at 6,330 units, is 6.2% greater than a year earlier, 30%
below 2006-2007 levels and 7% below the 10 year average.
(Source: DCLG).
Wales house prices:
Welsh development starts and completions
4,000
Jun 2010
Starts
The annual number of property transactions in Wales fell
during 2015 having increased continually between February
2013 & October 2014 when it reached a peak of 42,500
transactions per annum. In the year to September 2015,
annual transaction levels in Wales fell by 2.9% which
compares with a contraction of 5.3% across England &
Wales.
The number of development starts per year increased by
19.4% compared with a year earlier. At 7,070 in the year to
Q2 2015, the number of housing starts is 25% below 20062007 levels but 4% higher than the 10 year average.
South Wales Report | March 2016 | 26
Student housing
The sector continues to grow particularly in the University
towns of Cardiff and Swansea. City centre site values for
student housing are now significantly above residential
apartment site values. New schemes are proposed for
City Road, Callaghan Square and Custom House Street.
Investment in PRS has significant support at both
institutional and local authority level. 2016 will be the year
where PRS is considered as a mainstream investment
class. It is widely recognised that PRS has a crucial role
to play in the UK housing market and economy. Innovative
funding models will lead to high quality well managed
private rented communities which mirror the quality that is
more commonplace in established markets.
Outlook
Completions
Jun 2015
£100,000
Jun 2014
5,000
Jun 2013
£125,000
Nov 2015
6,000
Nov 2014
£150,000
Nov 2013
7,000
Nov 2012
£175,000
Nov 2011
8,000
Nov 2010
£200,000
Jun 2012
Wales
5,000 adjoining Pentrebane and Radyr
2,650 adjoining Creigiau
4,500 on land between Pontprennau and Lisvane
1,300 east of Pontprennau Link Road
PRS (Private Rented Sector)
Jun 2011
England & Wales
•
•
•
•
We anticipate a continuation of the improvement in the
residential market in the next five years with house price
growth in Wales in the range of 2.0% to 4.0% per annum.
We are expecting the rate of house price growth to peak in
2016 and then ease gradually over the next five years, in
part due to growing affordability issues.
Stuart Munro
Valuation
.
South Wales Report | March 2016 | 27
Planning
The Planning (Wales) Act 2015
Development management
Positive Planning Implementation Plan
Development management
The big news last year was that the Planning (Wales) Act
2015 received Royal Assent on 6 July 2015. The Act is a
landmark piece of legislation for Wales, that Carl Sargeant
(Natural Resources Minister) called this
“a gift from me to you”.
• Developments of National Significance (DNS) –
the thresholds are to be confirmed in the awaited
Regulations. Initial indicators are that onshore
energy generating stations producing between
25MW and 50MW. Welsh Ministers may also
specifically designate a DNS. These applications
may be submitted straight to Welsh Ministers with a
determination timeframe of 36 weeks, and no right to
appeal following the decision.
• A statutory requirement to undertake the preapplication process for major schemes, which
includes a requirement to consult with the public,
stakeholders and statutory consultees.
• ‘Special measures’ – a mechanism to submit to Welsh
Ministers where Local Planning Authorities (LPAs) are
categorised as poorly performing.
• Planning committee sizes to be reduced; Design and
Access Statements remain for major applications;
LPAs can refuse to determine retrospective
applications which are the subject of enforcement
notices; written representation is the default appeal
process; fast track process on advert appeals
introduced; procedure changes on notification on
commencement of development.
• Welsh language is now a material consideration when
applications are being determined. The impact on
those areas where Welsh is the first language being
very important.
• New Planning Advisory and Improvement Service
(PAIS) to be set up to improve best practice in the
Welsh Planning System.
The Positive Planning Implementation Plan provides detail
on the timescales of delivery relating to the changes that
the Planning (Wales) Act 2015 introduces above.
There are also a raft of changes to the development
control process which come into force in March 2016.
These include:
Planning policy
• Requirement to carry out pre-application consultation
for major development (s.17)
• Requirement to provide pre-application services (s.18)
• Invalid applications and the new appeal of the notices
to speed up validation (s.28 and 30)
• The erection of site notices for the commencement of
development (s.33 and 34)
• A review of statutory consultees identified in the Town
and Country Planning (Development Management
Procedure) (Wales) Order 2012 (s. 17 and 37)
• Post submission amendments incurring costs and
additional determination time.
• Design and Access Statements only required for
major development.
• Power for authorities to determine retrospective
applications subject to enforcement.
The Act will deliver several changes to both planning
policy and development management for planning in
Wales. Changes involve the following:
Planning policy
• A National Development Framework (NDF), with a
re-draft of Planning Policy Wales is to be prepared
• Strategic Development Plans (SDP) are a new tier
to be created to help ameliorate the prime candidate
sites identifying areas for investment, housing and
infrastructure
• Local Development Plans (LDP) will remain a key
focus, plus new legislation to allow authorities to
create Joint LDPs
Updates to Planning Policy Wales commenced in January
2016, which will eventually sit alongside the National
Development Framework (NDF) as the primary policy
documents issued by Welsh Government to lead and
manage the planning system in Wales.
The NDF will replace the Wales Spatial Plan as the
national plan to direct development and influence land
use. Preparation of the NDF commenced in January 2016
and will complete by autumn 2019.
The secondary legislation for Developments of National
Significance (major energy projects over 250MW;
infrastructure) will come into force in March 2016.
The Strategic Planning Panels wishing to set up new
Strategic Development Plans for the proposed designated
area should be submitted by Spring 2017. The actual
preparation and adoption of Strategic Development Plans
is not anticipated until 2021 / 2022. The update to Local
Development Plans (LDPs) has commenced to reflect
the change to the development plan framework outlined
above. The ability to prevent the withdrawal of an LDP
during preparation will come into force in summer 2016.
Joint Planning Boards will start in March 2016 to
encourage modern and efficient co-working of authorities.
The monitoring of Local Planning Authorities performance
has already begun. The reporting and the threshold
for ‘special measures’ is to be set out within guidance
by Welsh Government in the annual reports due every
summer, starting in 2016. As part of this, applicants will
have the ability to submit applications directly to Welsh
Ministers for determination from summer 2017.
South Wales Report | March 2016 | 28
Finally, a review of the Use Classes Order will be
consulted upon in the summer of 2016, to bring in
changes for the following year.
Kathryn Williams
Planning
South Wales Report | March 2016 | 29
Business rates
• 2017 Rating Revaluation comes into effect from 1st
April 2017
• 2017 Rating Revaluation will be the most redistributed
of the modern era (since 1990)
• It is anticipated that the rate multiplier will go up
resulting in increases in liability even where Rateable
Values remain the same
Business rates are set to be revised in 2017. Currently
business rates are based on rental values as at 1 April
2008 when rents were still at high levels after several
years of sustained growth. From 2017, rates will be based
on rents as at 1 April 2015 and the physical circumstances
as at 1 April 2017.
Although current commercial rents are recovering from the
recessionary period of 2009/10 with strong growth in some
sectors and localities, for other property sectors there has
been little, if any, rent increase. Some ratepayers may
even see their Rateable Values fall in 2017 as current
business rates were determined based on pre-recession
levels in 2008 and not all commercial property sectors
have seen rental values recover sufficiently to exceed
these levels.
The amount of tax paid from business rates has not
tracked the economic situation, placing an unwelcome
burden on UK commerce whilst acting as a dependable
source of revenue for the Government.
Rate liability is calculated by multiplying the Rateable
Value by a multiplier (commonly called the Uniform
Business Rate – ‘UBR’). We predict that the UBR will
rise following the 2017 Revaluation and this means that
ratepayers whose Rateable Value stays the same after
the revaluation will see an increase in their rates liability.
As is often the case with changes to Rateable Values,
some business will benefit whereas others will have to pay
more and consequently this revaluation will be the most
redistributive of recent times.
Business rates were devolved to Wales on 1 April 2015.
Devolution has meant that the revenues from business
rates have helped to determine the overall size of the
Welsh Government budget and are now more closely
linked to the performance of the Welsh economy.
Revenue from business rates in Wales raise over
£1.0bn a year which finances around 6% of the overall
Welsh Government budget. There are just over 100,000
properties that are liable for business rates in Wales. Many
companies assert that business rates are a heavy and
unfair form of taxation and that radical reform is required
mostly to make it more responsive to the economy in
which ratepayers operate. HM Treasury has undertaken a
review of the business rate system and report in time for
the budget in March. The Welsh Government also has the
opportunity to make innovative changes to the business
rate system which will be directly relevant to Wales. JLL
are a member of the Business Rates Panel which reports
to the Minister for the Economy, Science and Transport,
Welsh Government.
The analysis suggest that since 2008:
The effects of the 2017 revaluation will be far reaching
and in anticipation of this we have produced a rating paper
‘2017 – A brave new world?’ This paper examines the
redistribution of rates that will come in 2017 and highlights
the principal areas and sectors where we anticipate
change. A copy of this report can be found on the
JLL website - jll.co.uk/research
Rate liabilities will not change in exactly the same way
as Rateable Values as the aggregate yield from business
rates has to be maintained.
Under the rating system, the total revenue from nondomestic rates is fixed in real terms. Receivable income
from business rates is increased each year in line with RPI
and the effect of a revaluation is to redistribute the burden
of rates according to the new Rateable Values.
Susanne Thomas
Rating
South Wales Report | March 2016 | 30
South Wales Report | March 2016 | 31
Wales - Regional Experts
Chris Sutton
Lead Director
+44 (0)29 2072 6014
+44 (0)7710 888017
chris.sutton@eu.jll.com
Ben Burston
Research
+44(0)20 7399 5289
+44 (0)7730 318137
ben.burston@eu.jll.com
Justin Millett
Capital Markets
+44 (0)29 2072 6006
+44 (0)7816 813434
justin.millett@eu.jll.com
Rhydian Morris
Office Agency
+44 (0)29 2072 6002
+44 (0)7792 273120
rhydian.morris@eu.jll.com
Jennie Howells
Office Agency
+44 (0)29 2072 6002
+44 (0)7525 824610
jennie.howells@eu.jll.com
Martin Little
Lease Advisory
+44 (0)29 2072 6015
+44 (0)7834 782615
martin.little@eu.jll.com
Chris Sutton
Industrial & Logistics
+44 (0)29 2072 6014
+44 (0)7710 888017
chris.sutton@eu.jll.com
Heather Lawrence
Industrial & Logistics
+44(0)29 2072 6026
+44 (0)7791 022372
heather.lawrence@eu.jll.com
Laurie Hanlon
Industrial & Logistics
+44(0)29 2072 6055
+44 (0)7734 784854
laurie.hanlon@eu.jll.com
Jonathan Churchill
Buildings & Construction
+44 (0)29 2072 6008
+44 (0)7970 850056
jonathan.churchill@eu.jll.com
Robert Pratt
Buildings & Construction
+44(0)29 2072 6034
+44 (0)7525 824636
robert.pratt@eu.jll.com
Katy Mortimer
Buildings & Construction
+44(0)29 2072 6043
+44 (0)7976 583274
katy.mortimer@eu.jll.com
Paul Champken
Buildings & Construction
+44(0)29 2072 6011
+44 (0)7527 388030
paul.champken@eu.jll.com
Stuart Howison
Buildings & Construction
+44(0)29 2072 6050
+44 (0)7834 160265
stuart.howison@eu.jll.com
Tom Jenkins
Buildings & Construction
+44(0)29 2072 6016
+44 (0)7734 784772
tom.jenkins@eu.jll.com
Kathryn Williams
Planning
+44(0)29 2072 6022
+44 (0)7872 120931
kathryn.williams@eu.jll.com
Paul Tarling
Public Sector & Development
+44(0)29 2072 6047
+44 (0)7970 849985
paul.tarling@eu.jll.com
Susanne Thomas
Rating
+44 (0)29 2072 6009
+44 (0)7970 623042
susanne.thomas@eu.jll.com
Stuart Munro
Valuation
+44(0)29 2072 6035
+44 (0)7525 824655
stuartj.munro@eu.jll.com
Matthew Wright
Valuation
+44(0)29 2072 6012
+44 (0)7720 679517
matthew.wright@eu.jll.com
Harriet Costello
Valuation
+44(0)29 2072 6024
+44 (0)7525 824597
harriet.costello@eu.jll.com
Richard Nicholas
Property & Asset Management
+44 (0)29 2072 6013
+44 (0)7815 102061
richard.nicholas@eu.jll.com
Sophie Woodard
Property & Asset Management
+44(0)29 2072 6040
+44 (0)7702 100568
Sophie.woodard@eu.jll.com
Madeline Humphries
Property & Asset Management
+44(0)29 2072 6018
+44 (0)7815 940045
madeline.humphries@eu.jll.com
Rachel Haley
Property & Asset Management
+44(0)29 2072 6027
Patricia Freeth
Office Manager
+44(0)29 2072 6010
Sandra Williams
Secretary
+44(0)29 2072 6020
rachel.haley@eu.jll.com
patricia.freeth@eu.jll.com
sandra.williams@eu.jll.com
Caroline Crosbie
Secretary
+44(0)29 2072 6007
Natalie Jones
Secretary
+44(0)29 2072 6068
Hannah Colston
Apprentice
+44(0)29 2072 6024
caroline.crosbie@eu.jll.com
natalie.jones@eu.jll.com
hannah.colston@eu.jll.com
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