Commercial Property Blog
All posts from: November 2011
It’s been a relatively busy month of tastings and wine related events already so I thought that I would focus on a selection of highs and lows.
Corney & Barrow’s Christmas tasting at The Tower of London started the month on a high. There were a lot of wines worthy of mention but by far the best was a Blanc de Blancs Champagne, exclusive to Corney & Barrow, Salon 1999 (£215.00): pale gold colour; rich nose full of coconut, green apple, vanilla and brioche; delicate palate; and a long complex finish. The price reflects the miniscule production of Salon; however, for those wanting a more affordable substitute Salon’s sister house Delamotte’s Blanc de Blancs 1999 at £39.99 is good value.
Justerini & Brooks’ Rhône 2010 tasting at The Vintners Hall introduced a relatively new producer Chêne Bleu, whose wines were impressive. The Viognier 2007 (£25.00) stood out, in particular, because of its nose which was reminiscent of a fine perfume rather than a fine wine: intense floral characteristics; tangy citrus laced with fruit and spice on the palate; and a crisp lingering finish. I would have liked to have tried it with a couple of mince pies.
If only I had purchased the case of Mouton Rothschild 2008 which brought me to Paris on 17 November from Corney & Barrow or Justerini & Brooks. I would not then have had to appear before Le Juge de Proximité at 4 Place du Louvre at 09:30 as the wine would have dutifully arrived as ordered. I had hoped for a swift judgment in my favour following my well-rehearsed petition for two reasons. First, the delinquent French wine merchant www.1855.comhad failed to deliver the wine pursuant to an Ordonnance d’Injonction de Faire that I had obtained on 20 July. Secondly, the fact that almost every other matter before the tribunal involved the same defendant could hardly have helped 1855.com’s position. I was hopeful of a result but, as I am all too well aware, litigation carries risk: I was wrong. The company was given until 16 February 2012 to deliver my wine: unbelievable.
Lunch at Rhône-influenced Willi’s Wine Bar on Rue des Petits Champs was also a disappointment: poor service; average food, meat overcooked and undercooked respectively; and extremely expensive wine. The cheapest red on offer was €44.00 and came from a producer that I did not recognise.
I will return to Paris for Round 2 with 1855.com on 16 February 2012 and, armed with a bit of luck and a better restaurant recommendation, I might have cause to crack open a bottle of Salon (award of damages depending).
I suppose two steps forward for the commercial property sector would be asking too much but recent news that the government has finished its consultation paper and decided to introduce a criminal offence of squatting is at least progression. Whilst not a criminal lawyer, I am however troubled by the decision to limit the offence to be created to residential property alone. Despite the government's consultation paper confirming that "the vast majority of property owners thought that any new offence should cover all buildings", the position arrived at is that criminalising squatting in commercial premises will be something to review at a later date.
I am not sure whether we have a squatting crisis in commercial property, such that the workload for the police would make it impossible to meaningfully enforce the law. I understand residential squatting is less socially acceptable but I do feel uncomfortable about concepts in law making a distinction based on the type or nature of victim.
The Property Litigation Association clearly made a valiant effort to persuade the government to go down a different route here but, for the time being, commercial property owners with vacant buildings, whether they be large corporate or individuals with investment or trading property, must continue to self help where there may be more peril in transgressing the law.
I wonder what will happen and where the police must draw the line in a practice for mixed use buildings? Does the unlucky fish and chip shop owner who lives above his shop come home from holiday to find he can only phone the police if (a) his squatters are in the top floor sleeping in his bed, and not (b) the deep fat fryer? No doubt a test case to follow on a more plausible scenario will resolve.
British Land may be snapping up Virgin Active clubs, but Francis Salway has been hitting the proverbial treadmill with all manner of projects at rival industry leaders Land Securities. It puts paid to any stereotype of property heads making just one decision a quarter – what tie to wear on results day.
With their various schemes in Fenchurch Street, Old Bailey and Victoria moving forward and income moving upward, everything’s in rather good health. At least as far as London is concerned.
While rent from the iconic advertising lights at Piccadilly Circus doubled, the northern outlook is perhaps more aligned with that of pop singer Morrissey – who famous penned the song ‘Piccadilly Palare’. For example, Trinity Leeds remains just 54.8 percent let and while Primark are taking a whopping 90,000 sq ft letting, this won’t be ready until 2010.
Glasgow’s Buchannan Street fairs slightly better being 68.7 percent let “by value” – perhaps a telling change of metric – but it’s a world away from London.
Let’s be fair though: it’s no surprise that regional centres are well outside the overriding trend of decreasing voids, (which fell to 3.9 percent in Q2 from 4.2 percent in Q1). London hogs most of the tourism and commuter dollar and when you count it out of the equation the country is in recession for sure.
It’s certainly what the majority of retailers are continuing see and this is born out by the trends in Land Secs’ interim statement. Despite having more shops occupied, footfall has not actually risen, with Q2 sales actually falling 0.4 percent against the same period last year. “Occupancy rates are up because retailers are still taking space,” Land Securities said to me, “footfall in our centres is high, 300m shopper visits a year. Retailers want to be in front of those sort of numbers.”
So how much will the divide between London and rest of UK grow over next year? That will depend wholly on consumer demand, it would seem, as retailers pick their spots cautiously. “We will look to marry our development expertise with retailer commitment to a scheme before we take these opportunities forward,” Salway said.
He added that the firm has “a £275m, 1m sq ft, pipeline of opportunities to meet the growing demand from food and fashion retailers”.
Considering that only two weeks ago, bailiffs were sent into Jane Norman by all its landlords, it’s positive that those smaller than Primark still have some hope. Sources at another property firm tell me that bailiffs found no stock when they went into Jane Norman – just bundles of cash (between £10-20,000) left under tills in some stores - implying a rather messy end.
There are those that seemingly have bundles of cash to spend though. At the other end of the spectrum, brands like skinny-fitting French chicsters The Kooples – soon to feature designs by Pete Doherty - are shooting up their profile on the high street, if you’ll excuse the pun. These boutique brands are few and far between though, and the mercurial rise of webstores like Asos – whose sales have soared by 69 percent year-on-year - must surely be worrying.
“Small scale retail works where it is backed by retailers who want to take space and we are seeing stronger retailers looking to take space,” Land Securities added, saying that landlords need to react more to “accommodate growth or shrinking, reconfiguring space”. While it’s a laudable aim to chop up larger outlets so smaller businesses can get a foot into prime locations, this is also being flipped on its head as supermarkets head for the high streets.
“Supermarkets are increasingly going in town for space but are not ever going to replace traditional anchors,” Land Securities said, although for ailing, secondary centres that have no hope of attracting Topshop or John Lewis, this may not be the case.
While today’s figures can’t in any way be used as a barometer for the retail market, they are good news for the listed property sector and once again show Land Secs’ shareholders that the tall man with the plan is keeping everything in shape. Maybe they’ll keep the ‘health’ theme alive by picking up a few discounted care homes?
We have had a housing crisis for at least three years and in the short term it can only get worse. This Government continues to meddle with the planning system blaming it for all its woes whilst completely ignoring the role of the bankers and its own politicians with their five year view on policy formulation constantly aware of the backlash from their nimby electorate. We have the current planning ministers running scared of the latest campaign run by the Telegraph objecting to the draft National Planning Policy Framework and the presumption in favour of sustainable development, a policy that George Osbourne sees as ‘’imperative’ for Britain’s economy.
On the one hand we have the Chancellor blaming the ‘slow and inefficient’ planning system for the lack of growth and is supporting reform whilst the Tory heartlands are in and around the South East of England are vociferously objecting to any reform that will encourage any form of development that would impact upon their communities. The National Trust, English Heritage and the CPRE are spreading scare stories about development covering the countryside and encroachment upon the Green Belt whilst this is far from the truth and they are praying on the Nimby’s greatest fears to stoke up a campaign which sees yet another U-turn by this Government.
Only time will tell if minister’s are strong enough to resist the calls of these self interested groups or whether they capitulate and dilute the NPPF to such an extent that it becomes yet another muddled and ineffectual piece of planning policy guidance adding to the litany of obfuscation and uncertainty from this Government impacting upon the already fragile recovery.
There are a number of factors that impact upon the housebuilding industry and yes planning is one of them however perhaps of greater significance is the impact of the banking industry however this Government have shown a great reluctance to instigate any banking reform whilst tinkering with the planning system was perhaps seen as the easy option but this is now no longer the case.