NB Real Estate - Q3 2008 Review

Development pipeline

- 350,000 sq ft of development is scheduled to have been completed so far this year. 31,000 sq ft of this space remains available.
- There is currently a further 2m sq ft under construction of which 375,000 sq ft is available.
- 835,000 sq ft is scheduled for completion in the next 12-months and 225,000 sq ft of this remains available.

Take-up

Supply

Rental profile

Investment markets

Rental profile

- In Q3 achievable rents for Grade A space have decreased from £50 per sq ft to £45 in Docklands and from £40 per sq ft to £37.50 in the City fringes. The incentives available to occupiers continue to increase.
- In the year to September 08 City Fringe headline rental values have decreased by -6.3% from £40 per sq ft in Q3 07.

Supply by grade

- The total potential supply, including development sites and schemes where practical completion is estimated to be more than 12 months ahead, is 11.1m sq ft.
- 23% of total potential supply is available for immediate occupation; the remaining 77% represents development sites or space under construction which will not be completed for at least another 12 months.
- 34% of immediately available space represents Grade A space currently under construction.

Supply by size

- 21% of available space represents offices of 10,000 sq ft or less
- 49% of available space represents offices of 50,000 sq ft or less.
- 41% of available space represents offices of 100,000 sq ft or more.

Investment markets

- Q2’s transaction activity has been revised up from just £9m - £69m.
- Transaction activity in Q3 indicates that City fringe office investment decreased to £25m. But these figures are likely to rise. Twelve months earlier in Q3 07 investment amounted to £2.4b.
- The yield on prime City Fringe offices increased to 6.25% in Q3 from 6.0% in Q2. Twelve months earlier in Q3 07 the yield was 5.0%.