Somewhat surprisingly, on an overall basis, the sublease vacancy rate reported by the property owners surveyed exceeded the average national rate of four percent. While this may reflect the exposure of the property owners to specific markets – half of those surveyed have exposure to markets like Northern Virginia, So why are these large property owners exposed to this extent? It does suggest that no one is immune to the sublease problem, but it also supports the fact that sublease is largely a Class A phenomenon.
The primary fundamental venture to note here is, pick a legal property conveyancer at the absolute starting point. Over 25 percent of the state’s irrigated farmland was converted to commercial use between 1992 and 1995.While it was noted that all types of tenants have space available for sublease, tech tenants, especially telecom, were noted to be the largest source.As noted above, tenants interested in sublease space are not your strong, established credit tenants.
The majority represents leases signed in the last two years. Tech/telecom tenants were noted as a major source of sublease space by most of the brokerage respondents, but they were not alone – several markets included Fortune 500 companies, financial services, entertainment (Los Angeles).
Characteristics of the sub lessee include: new companies with little capital, companies that can’t do direct deals, that do not require long-term or expansion rights, and do not need TI dollars.Some sub lessees are Class B tenants interested in Class A space. Sub lessors clearly care less about credit.This is deterring many from marketing their property at all and forcing others to withdraw from the market, further exacerbating the supply problem. Transaction turnover has slowed as a result and could ease further over the summer if the supply bottleneck is not resolved.
Until the past three months there has been no clear pattern to the supply shortage, but more recently, in the majority of areas, a distinct scarcity of higher value houses and large flats has emerged. Conversely, a small number of locations have too many smaller and lower value properties on the market. On a less optimistic note for landlords, the improvement in demand is only on a par with the usual pick up between quarters one and two (see chart) and the current overall level of demand is at its lowest June level for three years. Furthermore, and whilst not true for all locations, there has recently been stronger demand for larger and higher value properties from more senior professionals, often derived from the City.
This is an average circumstance and the merchant is put in a dreadful condition particularly if the portion out of the arrangement was expected be used for a securing an alternate or assorted property conveyancers sydney cbd or house. As a result demand is slightly ahead of available supply at the higher end of the market and is closer to equilibrium at the lower end. The impact of current market conditions is that achieved rentals are frequently close to asking rents while rental values are rising steadily. Another consequence of the supply shortage and higher rentals is that the frequency of lease renewals has remained high as tenants find difficulty in bettering their current rental packages.
With the counterbalancing of a positive medium term outlook for the financial sector, the more recent stockmarket faltering and the continuing scarcity of supply there is little to suggest any imminent change to prevailing market conditions although the demand side could prove vulnerable.
Although very early in the year to judge, our optimistic 7-9% pa Central London sales price forecast for 2006 currently looks to be well on course. Our 4-6% pa rental value growth prediction is also looking quite promising although, on current evidence, may come in at the lower end of our forecast range. This was the highest quarterly price increase since 2002 and marks a sharp improvement on the 1.1% price increase in the preceding three months.This has been a prominent feature for several months now but the increase in demand and completed sales during early 2006 has not been matched by an equivalent improvement in new instructions.
The imbalance of demand over supply has hence widened further and has fuelled the considerable price rises of recent months. Higher City employment has added further to an already broad increase in demand whilst sizeable City bonuses have also impacted on aggregate demand and to a lesser extent on price levels. The conveyancer has the strong points which will help him to add profit and his efforts to complete the process.
Without such restraint, and given the extent of the demand and supply imbalance, price growth would undoubtedly be stronger. However, the resolve of purchasers is proving less firm when it comes to better quality property and has led to stronger price growth for these upper-tier properties. The market is presently lacking strong definition with demand quite fragile, lacking real depth and lower in aggregate than three months ago.
Rental value growth has now been on an upward trend for the past two quarters. Annual average rental value growth, however, has slowed to 2.9% pa, down from 4.1% in the preceding quarter. The latest rental value changes have been quite different between locations and between property types and sizes. The strongest rental value growth increases over the past quarter have been in Central West London where values rose by 1.9%, closely followed by the South Bank, City & Docklands area at 1.7%.New lettings demand eased significantly over the Christmas period, as usual, but despite picking up more recently (see chart) current aggregate demand for the time of year is lower than it has been in each of the past four years.
Improved City employment is playing only a small role in supporting demand. Overall, and in most locations, demand is running slightly ahead of available supply despite both being at quite low levels. The number of renewals has remained high as renters continue to struggle to better their current property and rental package.
Sales prices in the Central South West area have increased by a significant 3.0% in the quarter to 1st March. Sales demand has ballooned significantly in early 2006 and to a far greater extent than any other area. Demand across the whole of Central South West has been strong for smaller properties. These retail centers are a haven for specialty shops catering to high-end shoppers and are becoming quite popular among consumers, retailers and investors alike Conveyancing Melbourne Reviews expert at the College of Mount St. Joseph,
This rise is the highest quarterly increase here in almost four years. The improved employment and bonuses from the City are playing a significant part in increasing demand while the incidence of vendors setting asking prices above market valuations is particularly apparent in this area. Rental values have increased faster in Central West London than any other part of Central London over the past quarter, at 1.9%, and are 5.2% higher over the past year. The key feature here is the divergence of performance between property sizes. At the higher end of the market, where the supply of houses at rents in excess of £1,500 a week is very low, rental values are around 3% higher.
Middle market, 2-3 bedroom flats and smaller houses, have missed out to some extent but have still seen rental values climb in the order of 1.5% in the past Central West quarterly rental value growth quarter. However, since March 2004 the proportion of demand from those moving within three miles has increased by 18% to stand at 22% of all applicants. The market is notably quieter here and although demand has improved in the past six weeks it is lower than a quarter ago and at its lowest level for three years.
An option alternative to search for conveyancing specialists is a hunt specifically, for instance, you may need to counsel with a property law office in your neighborhood high road. Rentals demand has eased slightly over the past quarter in the Central North West area although there has been an increase in City-based renters. The incidence of renewals is particularly strong here as existing tenants continue to struggle to better their present accommodation and rental levels.
Tenant demand for high quality presentation and finishing is proving particularly important at present with some substandard properties now beginning to stick.
This suggests that the Central North West area has improved its profile and is attracting increasingly wealthy buyers. Properties South West of the River have experienced price growth in line with the Central London average of 2.7% during the three months to 1st March. However, during the past year this area has seen the slowest price growth in Central London at just 3.2% compared to the London-wide average of 4.5%.
Prices for houses have generally risen by around 4% over the past three months whereas prices for studio and one bedroom flats are largely unchanged.The market is quite patchy with periods of strong demand and high levels of activity interspersed with much quieter periods.
Availability of rental properties is quite low overall and is particularly poor for family houses with 3-4 bedrooms. Over the last year the distribution of sales applicants by age South West of the River has altered somewhat. 40 to 50 year olds have replaced 30 to 40 year olds as the largest proportion of buyers in the area.
The strong market has meant that properties are selling far quicker than usual and has led several vendors to bring their properties to the market at overly optimistic prices.
Average prices have now risen in each of the four quarters of 2005 with the final quarter the strongest. Property conveyance or solicitor checks that the seller is a trustworthy individual That’s expected to continue during the coming year, which will keep vacancy on its downward trend. For the first time this year all but one Central London area witnessed a price rise this quarter – a marked change to the patchiness during the remainder of 2005. The significant restriction in properties for sale, which has been evident for nine months now, has intensified further during the past quarter.
We expect the New Year to bring an increase in properties to the market, as usual, but question whether it will be sufficient to meet the current or anticipated increase in demand. Whilst we expect buyers to maintain their resolve in terms of seeking ‘value’, the emerging and escalating demand and supply imbalance may force their hands and lead to some strong price rises in 2006.Rental value growth in Prime Central London accelerated to 1.0% in the quarter to 1st December, the second strongest quarterly growth rate of 2005 (see chart).
All areas bar South West of the River, around Battersea, experienced price rises although none saw anything too significant or above 1.5%.Best annual performance was South West of the River, at 10.7%, followed by Central West (Marylebone etc) at 7.4%.Lettings demand has slipped by around 10% during the quarter to 1st December but remains marginally above the average of the last four years (see chart).
There remains a steady flow of new applicants which has been boosted in recent months by renters waiting to buy. Rents at or just below asking rents are usually being achieved with the exception of larger houses. Shortages are affecting all parts of Prime Central London but are not deteriorating. Indeed, there are early signs that available supply is beginning to increase as we head towards the year-end.