BUSHFIELD CAMP, WINCHESTER

Workshop – 31 October 2016

The economic and employment opportunity

and real estate context

AGENDA

Introduction to Knight Frank

Winchester – Context Macro & micro economic overview The employment opportunity Delivering success

Market dynamics

Enterprise M3 – Regeneris Report – review Winchester attributes Regional context Occupier demand overview Values – rental tone Supply – existing and site opportunities

Regional Employment Base Key occupiers How Winchester fits

Occupier Considerations Ingredients for success Priorities and opportunity

Discussion

EMMA GOODFORD

• Head of National Offices and EMEA Tenant Rep

• 1987-2016 30 years experience

• Business Park development consultant

Green ParkReading

•2.25m sq ft

•M&G/Norman Foster

•Cisco/Huawei/PepsiThames Water/CGI

Kings HillKent

•2.8m sq ft

•Kent County Council/Liberty/Harbert

•Mixed use

•2,800 homes and 1m sq ft offices/employment

The Forum, Solent Business Park

•650,000

•M+G/Triston

•HSBC/Specsavers

Chineham ParkBasingstoke

•MEPC/Patrizia

WINCHESTER - CONTEXT

THE UK ECONOMY

1.8

1.1

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

2016

2017

UK GDP Growth % IMF Forecast (year-end)

Source: ONS, Markit, IMF

30.0

40.0

50.0

60.0

70.0

Feb

201

3

Aug

201

3

Feb

201

4

Aug

201

4

Feb

201

5

Aug

201

5

Feb

201

6

Aug

201

6

UK PMI Index Services Sector PMI Index

FORECAST

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

UK South East Winchester

ECONOMIC GROWTH

• In terms of GVA,

Winchester has consistently

outperformed both the

South East and UK since

2007.

• Average growth over the

next five years is forecast to

be 1.9%pa. This is higher

than the average for both

the South East (1.5%pa)

and the UK (1.3%pa).

Source: Experian (Sep 16 index)

GVA, % Growth

POPULATION GROWTH

Source: Experian (Sep 16 index)

100.0

105.0

110.0

115.0

120.0

125.0

130.0

135.0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Winchester

• The population of

Winchester is forecast to

grow by 10% over the

next 15 years. This

equates to 12,000 more

people.

• The rate of growth of 10%

is higher than both that of

Hampshire (8%) and the

UK (9%).

+10%

ForecastPopulation, 000’s

UNEMPLOYMENT

Source: Experian (Sep 16 index)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Winchester Hampshire South East UnitedKingdom

2006 2016 2030

Unemployment Rate %

• The unemployment

rate in 2016 is 2.9%,

130bps below the

national average.

• The unemployment

rate is forecast to rise

from 2.9% to 3.5% by

2030. This is 200 bps

below the national

average.

80.0

85.0

90.0

95.0

100.0

105.0

110.0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Winchester

JOBS GROWTH

• The number of jobs in

Winchester is forecast to

grow by 12% over the next

15 years. This equates to

11,000 extra jobs.

• The rate of growth of 12%

is higher than Hampshire

(9%), the South East

(10%) and the UK (8%).

Source: Experian (Sep 16 index)

Forecast

+12%

Jobs, 000’s

OFFICE BASED EMPLOYMENT

GROWTH

Source: Experian (Sep 16 index)

+29%

Between 2016 & 2030

Admin and Support

Services

Financial

Services

Computer and

Information Services

+27% +16%

DELIVERING SUCCESS

• Prosperous centre

• Population growth supporting employment

• Quality sectors expanding

• Overall post Brexit low growth challenges

MARKET DYNAMICS

ENTERPRISE M3

REGENERIS REPORT

• Report identifies market areas

and demand by type

• Bushfield Camp focus is the

office and knowledge sector

• Opportunities/challenges

• Supply issues for Winchester

(and Guildford)

• Winchester priorities identified

• Research and public: private

dialogue

WINCHESTER

THE OFFICE MARKET – CONTEXT

• Regional influence – Southampton – Basingstoke –Fareham

• High class Cathedral City – people, retail, amenity, connections

• Office stock – small scale

medium grade

pepper potted

• Nominal profile within the region for commercial occupiers

• Focus of take up in other centres

• Supply side – limited and restrictive and unclear locally

REGIONAL AREA OF COMPETITION

Lower M3/M27 Corridor

OCCUPIER DEMAND ANALYSIS

TAKE UP IN WINCHESTER IN THE LAST 10 YEARS

4,499

16,950

21,526

47,046

17,048

7,000 19,630

0

1

2

3

4

5

6

7

8

9

10

2004 2006 2008 2010 2012 2014 2016 2018 2020

Nu

mb

er

of

Tran

sact

ion

s

• 26 transactions – 3 per annum

• 2013 – 8 transactions, average size 5,875 sq ft

• Royal Court Kingsworthy – scale and success, 19,630 sq ft and 10,877 sq ft leased

Source Knight Frank Research

OCCUPIER DEMAND ANALYSIS – WINCHESTER

TAKE UP BY SIZE IN THE LAST 10 YEARS

• Five transactions over 10,000 sq ft

• 57% sub 5,000 sq ft

• Small transactions dominate

15,451

20,660 40,127

57,461

0

2

4

6

8

10

12

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Nu

mb

er

of

Tran

sact

ion

s

>2,500 > 5,000 > 10,000 > 10,000+

Source Knight Frank Research

OCCUPIER DEMAND – THE MARKET CATCHMENT

RELEVANT TO WINCHESTER

MID-LOWER M3/M27 REGION

0

10

20

30

40

50

60

70

80

20~50,000 sq ft 50,000 sq ft +

Number of Deals by size band

0

5

10

15

20

25

30

35

40

45

Pre-let New Cat A Cat B

Number of Deals by grade

• Sub 50,000 sq ft dominance • Average 4-5 large deals per

annum

• New and Grade A completed buildings dominant – 75% of take up in quality space

Source Knight Frank Research

PRE-LET TRANSACTIONS

SE REGION IN THE LAST 10 YEARS

• The Thames Valley core market dominates

• 2008 – Best year 26% of 10 year take up

• Average year 280,000 in 3.5 pre-let deals pa

• Average size 80,000 sq ft scale

• Over 10 years – 35 pre-lets – 26 from plan

• Mid-lower M3/M27 Region pre-let transactions

include NATS, Carnival Cruises and Lloyds

Register

LOWER M3 CORRIDOR PRE-LETS

NATS Headquarters, Solent Business

Park

Carnival Cruises, Southampton

Lloyds Register Technology

Centre, Southampton

DEMAND OVER THE LAST 10 YEARS, BY SECTOR

MID-LOWER M3/M27 REGION

Construction Energy FBSManufacturing Other PharmaceuticalPublic sector Retail TMT

• Diverse – broad range typical of wider South East

• Professional services and tech dominant – 64%

• Pharmaceutical and public sector – 13.5%

Source Knight Frank Research

RENTAL VALUES

£12.50

£10

£17

£12.75-£15

£12-15.50

New & Grade A Rental Values

Grade B Rental Values

Source Knight Frank Research

£20-21£21-23

£21

£37£35

£33

£19

£25

£18.50

REGIONAL SUPPLY

110,633 (4)

1,783,393 (39)

New & Grade ASq ft (No of Schemes)

Grade BSq ft (No of Schemes)

Key existing buildings and site opportunities

217,371(7)

58,979(2)

200,276(4)

317,240(7)

22,500(1)

142,167(4)

0(0)

0(0)

298,426(8)

247,541(10)

Source Knight Frank Research

303,534(9)

0(0)

DEVELOPMENT SITES

Source Knight Frank Research

Florence, Basing View60,000 sq ftAbstract Securities

North 90, Chineham Park120,000 sq ftPatrizia UK Ltd

The ForumSolent Bus Pk268,303 sq ftTristan Capital Partners

North Harbour300,000 sq ftHighcross

Fareham

London

Guildford

Petersfield

Portsmouth

Southampton

New Forest

National Park

Lyndhurst

Woking

Reading

Winchester

M4

A303

Andover

Swindon

Marlborough

Basingstoke

Farnham

Aldershot

Farnborough

Newbury

M4

M3

M25

M3

M27

A3

A31

A33Bracknell

Staines

Chilcomb Lane & Chilcomb Park89,000 sq ftCavendish & Gloucester Properties

Benham Campus76,000 sq ftUniversity of Southampton

Station Approach?Winchester

John Moore Barracks?Winchester

Bushfield Camp?Winchester

REGIONAL OCCUPIERS

Source Knight Frank Research

Fareham

London

Guildford

Petersfield

Portsmouth

Southampton

New Forest

National Park

Lyndhurst

Woking

Reading

Winchester

M4

A303

Andover

Swindon

Marlborough

Basingstoke

Farnham

Aldershot

Farnborough

Newbury

M4

M3

M25

M3

M27

A3

A31

A33

Bracknell

Staines

REGIONAL ENTERPRISE ZONES

13 hectares740,000 sq ft but just 60,000 sq ft spec development

22 hectares1.2m sq ftNo spec development

8 hectares200,000 sq ftNo spec development

• Winchester specific opportunities limited – opportunity and choice would support micro economic growth forecast and attract/retain employment

MARKET DYNAMICS SUMMARY

• Regional influence – lower M3

• Winchester lacks scale and hence does not compete with other centres

• Local schemes can capture quality occupier demand

• Pre-let commitment is scarce

• Broad range of sectors active

• Values can support development

• Clarity of supply essential and range of choice beneficial

• Regional business can generate occupier demand

REGIONAL EMPLOYMENT BASE

HOW WINCHESTER FITS

• Supply can be responsive to sectors/employment

growth projections – this includes Bushfield Camp

• Business and professional services,

knowledge/tech/creative sectors and office based

retail services – all relevant to Bushfield

• Local government and public service sector

potential – scale and expansion

Source DTZ Report 2011

WHY WINCHESTER?

• Cathedral City – cachet and prestige – Cambridge/Oxford

• Connectivity – Road/rail access

• People – quality of workforce/educated

• Lifestyle – retail, housing, education

• Exclusive – brand value, limited opportunity

Cathedral College Housing M3/Train

INNOVATION - EDUCATION

University of Winchester

Sparsholt College

Southampton Science Park

University of Southampton

Southampton Solent University

Basingstoke College of Technology

• Strong correlation between education + innovation + talent availability +

employment opportunity

• Regional city examples – Guildford, Oxford, Cambridge and Greater London

WHAT WINCHESTER COULD DELIVER TO ATTRACT

EMPLOYMENT – THE REAL ESTATE CONTEXT

• A clear vision

• A credible plan detailing specific opportunities

• Promotion of the opportunity to a broad range of employers

• A drive to provide quality and architecturally sensitive schemes

• A project that attracts talent to remain in the city

• An approach which accommodates new and existing business to

grow

• Promotion of close integration with regional universities and colleges

– knowledge pool

• A location that is attractive to inward investors, funds and corporates

WHY WINCHESTER SUMMARY

• Cathedral city – cachet

• Capturing educational opportunity

• Expanding employment base

• Focus of quality but deliverable projects

• Range of choice to attract diverse occupier

base

OCCUPIER CONSIDERATIONS

OCCUPIER CONSIDERATIONS

• Talent – staff retention (cost of loss = 143% of basic

salary)

• Accessibility – infrastructure and technology

• Risk mitigation – cost neutrality

• Brand – supportive of image/market positioning

• Design – inspiring, creative, flexible

INGREDIENTS FOR A SUCCESSFUL

WORKPLACE

•High quality architecture

•Materials and design

•Efficiency and flexibility

•Sustainability considerations

•BREEAM | LEED | WELLNESS

•Open spaces / landscaped areas

Design Criteria

• Careful master planning

• Considerate phasing

• Adaptability – technological changeCritical Mass

• Professional team

• Quality performance

• Clarity of timelines

• Certainty and risk mitigation

• Brand and market positioning – significant for Winchester

Delivery/Certainty

WHAT DOES SUCCESS LOOK LIKE?

• Professional team – procurement experience

• Infrastructure investment – ready to go site

• Integrated public transport AND parking provision

• Brand – market positioning – quality profile

• Commitment – success supporting success

• Progressive Local Authority – Ray Morgan (Woking), Sir

Howard Bernstein (Manchester)

Architecture QualityRange

SustainabilityPlace

People

Delivery

Design

Mix

Management

Future Proofing

Stakeholder Involvement

Value

Connectivity

Brand

Landscape Materials

Specification Choice

DESIGNING A NEW BUSINESS

ENVIRONMENT

Profile/PRPromotion

Mix/range Education

Availability

Funding Planning Certainty

Plots Buildings

Roads Services

Flexibility Density Churn

Price/Cost Tenure Terms

Transport Integration on

Cars/Bikes/People/Tech

REAL ESTATE COSTS

Cost Cutting

Cost Saving

Cost Efficient

Cost Neutral

2008 2009-11 2011-13 2014-16

THE GROWING INFLUENCE OF THE

DECISION MAKER

OCCUPIER CONSIDERATIONS

SUMMARY

• War for talent – employee focus

• Technology impact

• Designing brand awareness

• Certainty and clarity – delivery

• Quality and flexibility of environment

• Risk awareness – cost neutrality

• The opportunity for Winchester is tangible

QUESTIONS & DISCUSSION