place agm 2013: matt crompton
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Matt Crompton, joint managing director, Muse Developments - national developer's perspective on the marketTRANSCRIPT
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Matt CromptonJoint Managing DirectorMuse Developments
A national developer's perspective on the market
Place AGMThursday, 11 April 2013
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The North West in context
Muse’s experience of the North-South divide:
• ‘North-Greater London divide’• Commercial: pre-lets a prerequisite• Apartments (South): Town housing (North)
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The Muse perspective
• Strong parent
• Track record
• Persistence and doggedness
• Embracing new funding streams
• £86 million construction work on site at start of the year
• £190 million construction work on site now (including 530,000 sq ft commercial and 870 residential units)
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Muse in the North West
St Paul’s Square, Liverpool
• 109,000 sq. ft.• Best in Class• BREEAM Excellent• Significant occupier interest• Slow take-up• Rents v Inducements
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Muse in the North West
Talbot Gateway, Blackpool
• Council offices 125,000 sq ft• Sainsbury’s 120,000 sq ft• Other retail 30,000 sq ft• 650 space multi-storey car park• Phase 2 hotel and station improvements• Trust Account in credit
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Muse in the North West
Smithfield, Manchester
• Phase Six• Work commenced March 2013• 77 one, two and three bed apartments• 6,000 sq ft ground floor commercial space• Proceeds will secure the Grade 2 listed
‘Mackie Mayor’ building
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Muse in the North West
New Bailey & Chapel Street, Salford
• Largest ever planning application• CPO confirmed• Land assembly well advanced
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Muse in the North West
New Bailey & Chapel Street, Salford
• On site with first phase residential(houses and apartments)
• Hotel, MSCP and offices to follow
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Muse in the North West
Grand Central, Stockport
• Phase One 1,000 space MSCP on site(pre-let and forward funded)
• 60% of Council investment repaid• Completion first quarter 2014• Phase Two offices, hotel and public
realm will be pre-let driven
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Muse in the North West
Chester Central• 500,000 sq.ft. offices and residential• A new Business Quarter scheme • Planning permission secured March
2013 for first phase offices
New Victoria, Manchester• 500,000 sq ft of commercial office space• Active ground floor uses
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Muse in the North West
Bridge Street Quarter, Warrington• Market Hall• Cinema, bars and restaurants• Council Office Building• New Public Square• Further Phases of retail, offices & hotel
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Challenges and Lessons Learned
• Explore innovative funding routes(traditional models)- ERDF (2014-2020/admin. by LEPs?/£???)- JESSICAs (Evergreen & Chrysalis)- Local Infrastructure Fund (£475m)- Growing Places Fund (£100m)- Regional Growth Fund (£2.6bn)- Get Britain Building- ‘Help to Buy’
• Rates, fees, conditions, clawback, outputs, sectors, deadlines, due diligence, etc.
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Challenges and Lessons Learned
• Occupiers are key (excl. residential)
• Lease terms are critical
• Firmly focused investor criteria
• Emerging markets
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Public/ private partnerships
• Long-term relationships (10-15 years)
• Committed Project Champion
• OJEU straight-jacket
• Flexible partnership agreements
• Performance milestones and remedies
• Impact of austerity measures
• Opportunities drying up (Why?)
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Viability in a challenging market
How do schemes stack up?
• Pre-let and/or forward funded
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Viability in a challenging market
How do schemes stack up?
• Pre-let and/or forward funded
• Council-anchored
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Viability in a challenging market
How do schemes stack up?
• Pre-let and/or forward funded
• Council-anchored
• Speculate selectively (with public subsidy)
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The Muse property prognosis
• Confidence and liquidity are key
• Supply v demand imbalances
• Residential still Government’s priority
• ‘Recession proof’ pre-lets will lead the way
• 2nd tier cities look good value (cf London)
• This is the new banking ‘norm’
• ‘Shadow Banks’ will emerge
• More austerity will follow pre-election fillip
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The Muse property prognosis
• Time to prepare for the upturn
• Choose your partner carefully
• Target opportunities using crosshairs
• The North West in context (again)
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Matt CromptonManaging DirectorMuse Developments
A national developer's perspective on the market
Place AGMThursday, 11 April 2013