Leicester

Question 1

What was Leicester’s vacancy rate?

Answer 1

4% (less than UK average of 9%)

Question 2

Did you factor in hope value for the council investment?

Answer 2

Yes - reflected in a sharper yield

Question 3

Why was there a lack of stock in the town centre?

Answer 3

Office market characterised by lack of available stock in City Centre and most of development out of town

Also in the City Centre PD rights had removed a large number of competing buildings

Question 4

Did you consider residential conversion?

Answer 4

Yes, the property had gained consent for residential conversion in 2023, therefore included architects drawings in marketing brochure and sales / sq ft (£90 psf) - however it didn’t stack up once conversion costs were factored in, as the cap val was only £82 psf, so I only provided a MA for office use

Question 5

What was the Council investment and what impact did this have on value?

Answer 5

• £8m redevelopment of Leicester Market (adjacent to building)
• Revitalise the area and increase occupational demand

Question 6

SWOT?

Answer 6

Strengths: City centre location, low vacancy rate (4%)
Weaknesses: Some vacancy, mixed covenants, cap ex required on vacant units
Opportunities: Residential conversion, council investment
Threats: Office market (flight to quality), interest rate environment making it harder for buyers to secure debt, sustainability (some EPCs were Es which would likely be non-compliant if reassesed with new methodology), the market may not create the expected buoyancy

Question 7

Summarise investment evidence

Answer 7

• Focussed on office assets in secondary regional locations (Nottingham, Birmingham) which had potential for residential conversion

Question 8

Is Leicester a good office market?

Answer 8

Yes - low vacany 4% compared to rest of UK (9%)

One of the largest commercial centres in the Midlands due to its central position and proximity to road and rail networks