- National occupier
- 25—100 spaces
- Available for immediate occupation
- 0.25—1 acre plus
- Leasehold or freehold
Contact: Oliver Exton | 07900 8905599
Contact: Oliver Exton | 07900 8905599
The announcement of the ban on the sale of new petrol and diesel vehicles being brought forward again to 2030 will lead to some potential issues for dealership properties.
Mark Frostick, Automotive & Roadside Senior Associate talks to Motor Trader on how motor dealerships will adapt to this significant change and why they should invest in electrical supplies to support their businesses.
Whilst almost all the manufacturers already have an electrical offer of some kind and the rest have plans to launch in the next few years, this shift will see a major change to how a dealership will operate.
Contact: Oliver Exton | 07900 890559
Rapleys Asset Management team specialises in maximising income and value of property assets and minimising clients’ liabilities. In collaboration with our other specialised teams, our senior team of Partners have experience working with investors, occupiers, developers and landlords, in both the public and private sectors.
We concentrate on added value initiatives such as:
• Formulating asset and portfolio strategies
• Repositioning assets
• Change of use/reconfiguration
• Strategic refurbishments
• Re-gearing leases to improve terms and covenant
• Transaction management
Our sectors are:
• Industrial & Distribution
• Retail & Leisure
• Automotive & Roadside
• Charities/non profit
• Affordable Housing
What we do
We provide a one stop solution for the asset life cycle, from initial investment advice on acquisition, planning advice, redevelopment, project management, building consultancy, lease consultancy, management and disposal. Our service is flexible. It can be:
• End-to-end of the ownership cycle, by working alongside our Investment team to identify added value opportunities (pre-acquisition) and delivering these initiatives on acquisition, through to final exit or;
• Ad hoc advice to improve current asset performance during the hold period, by exploring change of use, re-development initiatives and lease re-gears.
Our strong nationwide team of 150 readily collaborate to drive “added value” initiatives for our clients, providing cross specialism advice. Our in-house sector specialists can immediately support initiatives with their excellent market knowledge and expertise, without relying on external advisers. The scale of Rapleys enables us to resource instructions, providing an efficient collaborative Partner-led approach.
“The UK is in uncertain economic conditions, which will challenge your asset performance. Rapleys approach, combined with our breadth of experience and skill set will position assets to maximise performance and minimise liabilities – our independence enables clients to maintain discreet profiles, with a focused adviser who truly values long term relationships.”
Adam De Acetis, Head of Asset Management
“Rapleys asset manage Trident Industrial Estate on behalf of the Royal London Property Fund (The Fund). The mandate is led by Adam De Acetis, with support from a multi-disciplinary team. Over the period since acquisition, The Fund has benefited from both new leasing and lease restructuring transactions which have significantly added value. Rapleys has clearly demonstrated an ability to reposition an asset and drive investment performance.”
Andrew Johnston, Fund Manager, RLAM
Tom joined Rapleys in March 2020 having spent the previous five years working as an agency surveyor in Chester. Tom graduated with a degree in Real Estate from Sheffield Hallam University in 2015 and is now a member of the Royal Institute of Chartered Surveyors.
Now in the Automotive & Roadside team, Tom is experienced in assisting with matters such as disposals, acquisitions, leasing and lettings and acts for a number of national and independent operators.
Contact: Oliver Exton | 07900 890 559
Contact: Daniel Cook | 07795 660259
A seven-fold increase in demand for petrol filling stations occurred in the first month following the easing of the UK’s Coronavirus lockdown restrictions, according to Rapleys, the property and planning consultancy.
Rapleys’ Automotive and Roadside team, who manage the property needs of fuel retail operators of all sizes across the UK, received seven times as many enquiries in in the month of July, following the easing of lockdown restrictions, as they did in April during the height of the lockdown.
To read the article in full please click here.
Contact: Daniel Cook | 07795 660259
Contact: Daniel Cook | 07795 660259
Oliver Graduated from Sheffield Hallam University in 2019 before joining Rapleys the following September as a graduate surveyor in the Automotive and Roadside sector.
Previously, Oliver worked at Henry Boots Developments in Sheffield as an Assistant Development Surveyor during a placement year.
Oliver will also be undertaking the APC process.
Callum moved to Rapleys in June 2019 with five years experience as a commercial property agency, specialising in the acquisition and disposal of retail and industrial property. In 2019 he graduated with a first class honours degree in Real Estate from Birmingham City University.
Callum is working within the Automotive and Roadside team dealing with a broad range of instructions whilst undertaking the APC.
Contact: Daniel Cook | 07795 660259
Contact: Daniel Cook | 07795 660259
Contact: Daniel Cook | 07795 660259
Contact: Daniel Cook | 07795 660259
Roadside retail was in the fast lane before Covid-19 struck. UK petrol forecourt property value grew by 3% in 2019, its eighth consecutive year of growth, according to the Barber Wadlow/Experian Catalist Forecourt Property Index. This is being driven by growing profits, which were also up 3% in 2019.
Pay at pump terminals are also key to improving vehicle circulation and ensuring customer flow is not stifled by the growing range of goods and services on offer. So too is ‘pay and spray’ contactless technology, allowing motorists to pay for jet washing their cars without needing to queue in store. Many operators are installing banks of up to five jet washes on mostly residential sites because of the boost to profits they can deliver.
It may come as a surprise that services like this, along with offerings such as coffee and food to go, are playing a greater role in the growing size of forecourt sites than technology that’s expected to eventually revolutionise the way world gets from A to B: electric vehicles (EV).
“We’re in a chicken-and-egg situation regarding the provision of reliable charging points nationwide which address consumer anxieties around range versus the inevitable explosion in electric cars with bigger batteries,” says Phil Blackford, head of automotive & roadside at property and planning consultancy Rapleys.
Indeed, just 0.5% of the UK’s licensed cars were ultra-low emission vehicles such as pure electric or plug-in electric/petrol or diesel hybrids in 2018, according to Department for Transport figures.
Yet by 2030 this is expected to have grown to between 7% and 27% and to between 49% and 89% by 2040, predicts the National Grid. One reason for the gap between the highest and lowest expectations for EV take up is the scale of the barriers that need to be overcome.
To read the article in full please click here.
Contact: Mark Frostick | 07785 264490
Contact: Daniel Cook | 07795 660259
Contact: Peter Nicholas | 07879 487646
Contact: Mark Frostick | 07785 522958
Contact: Mark Frostick | 07785 522958
Peter previously worked within the Telecoms department at GVA for 5 years. At GVA Peter found his passion for the property industry and started studying with the University of Estate Management. Continuing his studies, Peter graduated with a degree in Real Estate Management in June 2019.
Peter is currently working within the Automotive & Roadside department, acting on behalf of a number of national operators, primarily dealing with lease consultancy matters.
Peter is now working towards the completion of his APC in the not too distant future.
Contact: Daniel Cook | 07795 660259
Rates relief announced in last week’s Budget could be worth £40m for the forecourt sector, according to property and planning consultancy Rapleys.
It also suggested that forecourts may benefit from some of the new £500m funding to support development of rapid chargers.
Stacey Jolly, surveying technician in the ratings team at Rapleys, said: “Rapleys’ rating team welcomes the recent budget announcement and have calculated that approximately 38% of petrol stations (circa 3,200 across England and Wales) will benefit from the 100% retail relief announced by the chancellor in his budget on the 10 March.
“The announcement, which affects the financial year 2020/21, covers any petrol station with a rateable value of £51,000 or less and means that they will receive a full relief on their rates payable. Having investigated the potential rates liability of all the sites, those affected could benefit from a total saving of up to £40m pounds for the financial year 2020/21.”
Mark Frostick, senior associate in the automotive and roadside team at Rapleys, commented: “This comes as good news in a time of uncertainty. Although fuel prices are slowly coming down, this sector will be hit hard with the panic the country is facing over the Covid-19 outbreak and the potential self-isolation of many people.
“In addition to the rating relief the government also announced £500m towards rapid charging hubs for electric vehicles. It may well be that some of the very petrol stations that are getting rates relief will also benefit from the investment from grants to provide a charging point.”
As of 19 March, Stacy adds ‘with the ever changing announcements being made by Government in the last few days, this has now been extended to all retailers regardless of the level of rateable Value. Therefore, all retail properties will get 100% relief from 01 April 2020.’
Contact: Daniel Cook | 07795 660259
Contact: Peter Nicholas | 07879 487646
Yesterday’s Budget announcement contained a clear message of business continuity as the Chancellor relayed emergency measures to mitigate the impact of Coronavirus. Public health, the NHS, SMEs and workers were the primary focus, but for the property industry, there were still some takeaway messages. Not least, an announcement of short term emergency Business Rates relief, as well as a programme of investment launched for roads and infrastructure. Key members of our service teams add their comments.
Russell Smith, Partner, comments; ‘overall there was some welcome, positive news for the high street, in particular for small shop and restaurant owners who will see an increased business rates discount. It is a temporary and extreme step sadly in light of the destabilising Coronavirus pandemic, but nonetheless it is well needed and overdue for the ailing retail sector.
The announcement to hold a review into the long term future of business rates should make a marked change to the future of the high street. This will need to be implemented in a timely manner however as there is likely to be a further reduction in footfall in high street across the country in the months to come.’
Alfred Bartlett, Partner, adds ‘ironically, the digital service tax (2% tax introduction on digital businesses) will also help bricks and mortar retail and may prove a good first step in balancing the investment in trading formats and redressing the high street decline.’
Phil Blackford comments; ‘the Government have announced a fund of £500 million over the next five years to support the rollout of a fast-charging network for electric vehicles ensuring that drivers will never be further than 30 miles from a rapid charging station. That is very welcome news to both manufacturers and EV charge suppliers and hopefully will provide the much needed kick start to creating the necessary infrastructure in the UK to align Government targets, manufacturer’s development and production and a structured network of EV charging stations.’
Jason Lowes, comments; ‘in terms of planning, most of the announcements in the Budget were primarily financial commitments, with the Government’s planning reform initiatives saved for today’s announcement by Robert Jenrick. These indicate that a planning white paper will be released in the spring, addressing a wide range of matters, including:
By way of background to the above, the Government feels that the planning system is holding back the delivery of housing, and that these initiatives will break down barriers. However, they are all at a very early stage, and we will be looking very closely on how they develop. Nevertheless, any initiatives that render the planning system more predictable and straightforward to navigate will no doubt be welcomed by the industry. Rapleys Town Planning team will be releasing a fuller newsletter on these reforms shortly.’
Contact: Daniel Cook | 07795 660259
Contact: Daniel Cook | 07795 660259
Last year saw strong margins on fuel sales and the continuation of acquisitions among some of the smaller groups by the larger independents. However, as per the last few years there has been a relative lack of stock and it has remained a seller’s market.
Whilst the Brexit uncertainty may be a little less we haven’t, and are unlikely to, see a significant change in the levels of demand for sites in 2020. However, with some of the oil companies that have previously exited the direct retailing market returning, as well as TOTAL re-emerging as a brand in the UK, we expect demand for good quality sites to remain. Likewise, we expect continued demand for new to industry sites from the oil companies and the independents. At this pace, 2020 could see a net addition of sites over the course of the year.
Whilst the independents make up more than 50% of the market(*) it’s interesting to see that oil companies appear to be moving back to operating sites themselves. Harvest took over HKS last year, Gulf have been opening new sites and Jet have acquired a number of existing forecourts. With the bigger oil companies also likely to follow, competition remains strong for opportunities.
On existing portfolios we also expect to see some more refurbishments/redevelopments to enhance sales. This will be both with some clever use of the existing property and some complete redevelopment. There are sure to be some more groups selling out but there are relatively few left that won’t have already considered the option in some detail.
2020 is likely to see electric vehicles continue to dominate the news but perhaps less so on the forecourts themselves. At present there has been some limited uptake, but unless a forecourt has sufficient space to accommodate long term parking and sufficient demand to make it worthwhile, this position is unlikely to change significantly. Where we are likely to see it happen more is on new to industry sites (notably, there were 54 in 2019). With councils being extremely keen on environmental and green issues, we expect new builds to require some level of electrical charging as part of any planning consent.
This is not to say electric is not making a difference, there is strong demand from operators and we are expecting some stand alone electric charging petrol stations this year, along with the continued rollout of charging points across the UK. Forecourt operators will need to consider this if they lose traffic and therefore custom to other locations but this is a part of the industry that is certainly here to stay.
Contact: Daniel Cook | 07795 660259
Contact: Daniel Cook | 07795 660259
Ken Brown Motor Group have opened a new Hyundai dealership in Letchworth Garden City. The deal involved a new 10 year lease on the 0.78 acre site in Icknield Way, with the previous tenant surrendering an existing lease and withdrawing from the town. Rapleys Automotive and Roadside team brokered the deal on behalf of the landlord, Fevore Limited.
Richard Forman of Fevore said: ‘We are delighted that Rapleys were able to secure continuing long term occupation of the property in a tricky market and without a rental void. The deal really was a ‘win win win’ allowing Progress to exit and Ken Brown to step in while also enhancing our asset’.
Geoff Sayer, partner at Rapleys said: ‘This demonstrates that opportunities exist in the current market for brands to invest in new and affluent territories’.
Jon Taylor, Managing Director of KBMG, said: ‘We are delighted to have this opportunity to expand with Hyundai and look forward to growing our business in Letchworth and beyond with this exciting new brand for the town’.
As featured in Automotive Management Online on 16 January 2020.
“Petrol filling stations are still the ‘darlings’ of the property market with strong demand and therefore values on the up.”
Mark Frostick, senior associate in the automotive and roadside team at Rapleys, comments, ‘in 2019 we saw some dealer group takeovers, but less of the really big deals that characterised the last few years. While most of the eye-catching mergers and acquisitions have probably happened, we expect to see some continued consolidation in the sector as the market rationalises in what is a highly competitive and challenging consumer market. At the same time, some of the larger independents have continued to expand overseas at least in part, perhaps, as a hedge against any negative impact Brexit might have in the future on the UK market.’
Frostick says the real challenge continues to be a lack of stock in the market. ‘The difficulties in unlocking new sites vary from location to location for example, a trunk road site in a rural area may have the highest potential value but can face complexities when it comes to planning. Meanwhile, urban sites can face more competition from a variety of alternative uses both residential and commercial with drive-thru restaurants likely to be the biggest competitor.
Forecourt site values have continued to hold up particularly due to the lack of stock and competition for sites and the market is interested in good performing sites at every level. Freehold demand is stronger than leasehold, but we continue to see issues, particularly at the lower level, where deals have failed to get over the line in an appropriate timescale as parties have struggled to keep up the pace and momentum to complete. With competition for sites high, it is paramount that operators are equipped to move swiftly and those who use professional advisers and solicitors with petrol station experience will always be better placed. At least partly as a consequence of limited property stock, we have seen operators looking at innovative ways to improve existing sites and fully utilise what space they have, for example by expanding upwards to create a multi-storey forecourt retail offering.
As for electric vehicles, Frostick says that while there continues to be much discussion about the long-term impact of electric vehicle infrastructure on the forecourt industry this is yet to fully translate into notable and widespread innovation on site. According to a recent government announcement, there are now more charging points than petrol stations but, for the most part, operators so far have been simply squeezing in charging points on existing sites where they can. “With the government now publishing league tables on electric infrastructure though and making new funding available for Local Authorities we may see the landscape begin to change, particularly as and when electric vehicles become more affordable and ubiquitous.’
The full article is available in print only from Forecourt Trader (01/01/2020).
Phil is head of Rapleys’ automotive & roadside department. He specialises in valuation, business tenancy, lease consultancy and Expert Witness work within the principal asset classes of petrol filling stations, car dealerships and all types of “roadside” property. He is also a RICS Registered Valuer.
Phil was a founder member of the Property Advisory Panel created by the Retail Motor Industry Federation (RMIF) and was also a contributor to the RICS Working Party that provided published valuation guidance on the Valuation of Petrol Filling Stations. He is also a registered Expert Witness within The Expert Witness Register, the UK Register of Expert Witnesses and The Expert Witness Directory. He has given evidence at Arbitration Hearings and at Lands Tribunal.
Phil internally coordinates Rapleys’ “one stop shop” approach for this specialist sector by combining other disciplines with the core team service providers, such as building consultancy, project management, investment, development, rating and property management.
Phil joined Rapleys in 1984 and was elected as a partner in 1991.
Wakako is a senior associate in Rapleys’ town planning team and has advised on a wide range of planning projects involving commercial, leisure, retail, residential and mixed use commercial developments. Her experience includes project management and co-ordination of multi-disciplinary teams in a number of planning applications and appeals, as well as providing advice on the policy formulation process in protecting and promoting clients’ interests.
She has represented clients at appeal hearings and assisted the expert planning witness in giving evidence at a major Inquiry, as well as providing assistance in support of various large scale mixed use regeneration schemes. She has also negotiated with various agencies and stakeholders through a number of complex planning applications.
Wakako has also represented clients at Local Plan examination hearings.
Wakako joined Rapleys in 2006 as a graduate planner, and was promoted to senior associate in 2015.
Stacey has worked for Rapleys since 2001, starting out as an office administrator and working in various secretarial and administration roles within the company before starting work in the rating department in 2005.
Since then she has gained good knowledge of business rates and in 2008, decided to take the opportunity to further her career and undertook a distance learning course in Surveying Practices.
In 2010 Stacey was awarded her Diploma in Surveying Practices.
Her role now includes dealing with professional casework, such as appeal recommendations and negotiating rating appeals on behalf of our clients, as well as being head of administration for the department
Contact: Alfred Bartlett | 0121 454 6439
The former Renault/Hyundai dealership on Hilton Road in Ashford, Kent, has been sold to Dunmore Ltd to be split up into three trade counter units.
Motorline placed the property on the market with Rapleys’ specialist Automotive & Roadside team, in advance of their relocation of the brands to a new site on Orbital Park elsewhere in Ashford.
The property was a dual branded dealership of nearly 17,000 sq ft on a site of 0.86 acres, with two glazed showrooms, offices and dedicated workshop facilities.
Mark Frostick of Rapleys commented; ‘we had interest from a variety of occupiers and users and we were able to tie up a purchase to coincide with our client’s relocation to their fantastic new premises elsewhere in the town. It was also somewhat of a homecoming deal for myself in that 20 years ago my first surveying job as a graduate was with Colyer Commercial in the town.’
As reported in AM Online where Motorline’s latest openings in the area are summarised.
Rapleys Automotive and Roadside team were pleased to complete a deal on a former car showroom on Regents Park Road, North London. The 4,030 sq ft premise had a prominent frontage to the busy road and attracted significant interest from trade, retail and leisure operators which resulted in competitive bidding in excess of the quoting rent.
Toolstation were successful and secured a 10 year lease with V8 Properties Ltd. The unit is one of the first of a new retail format being rolled out by Toolstation within London. Planning consent for A1 was refused previously but after successful appeal it was overturned and the unit has now been refurbished to Toolstation brand standards.
Rapleys client Daniel Sayers of V8 Properties Limited, comments: ‘As a small family owned property business we are delighted that Rapleys have been able to secure excellent terms for the letting of our former car showroom, enabling its modernisation and long term occupation by a well-known national operator, thus safeguarding and significantly enhancing the value of our asset.
Geoff Sayer and his colleagues at Rapleys steered us expertly through a successful marketing campaign, a contentious dilapidations dispute and a tortuous planning process, aided by an enthusiastic tenant in Toolstation Limited.
Rapleys were able to advise us on marketing, rental value, dilapidations, business rates, planning and project management ultimately leading to a better deal than we had hoped for and enabling us to make significant savings along the way.
The constructive partnership of Geoff and his colleagues with us as the client and also with our tenant enabled this project to succeed (even when at times it seemed unlikely) and we are very grateful for that.’
Contact: Mark Frostick | 07785 522958
Contact: Peter Nicholas | 07879 487646
Rapleys, the planning and property consultancy, has said the automotive retail industry is taking a “wait and see” approach on investment in electric vehicle (EV) infrastructure.
While there are some franchises that will mandate a certain level of infrastructure and charging points based on their corporate identity, Mark Frostick, Rapleys senior associate roadside and automotive, told AM: “Investment in EV infrastructure is generally not on a lot of people’s radar from a property perspective right now.
“Everyone is looking at how technology is changing and doesn’t want to be caught investing in the wrong thing or to the wrong level.
“There are a lot of groups waiting to see what is happening before making that investment decision.”
Contact: Daniel Cook | 07795 660259
The Motorway Service Area (MSA) has been synonymous with the long car journeys of Britain since they opened with the M1 in 1959. Since then, the humble MSA has seen vast improvements and now delivers an evolved, efficient service for road users up and down the network. Operators and the retailers within, can clearly see the benefits of adapting to the climate in this steady sector, but how did we get here?
Following the first MSA opening in 1959 there have been a further 92 opened across the UK. Starting life as a Government owned establishment they became denationalised in 1992 and are now, in the majority, privately owned and managed. The three main operators of sites are the household names we are all familiar with seeing along our journey’s; Moto (38 sites), Welcome Break (24 site) and Roadchef (20 sites). These are not the only players however, with Extra operating in 8 sites and a further one under construction in Leeds.
Generally, the requirements for MSAs are based on the Department of Transport regulations. They include several stipulations;
• 24 hour access, 365 days a year
• Free parking
• Free facilities
• Fuel provision
• Disabled access
• At least hot drinks and cold food available at all times
• A picnic area of at least 0.5 acre
There are other points to consider dependent on location and the operator will work in conjunction with the local Police, Regional Tourist Board and Highways Agency to ensure services are provided. This list of requirements is likely to continue to evolve over time. For example, the introduction of electric charging points may become more of a necessity than a luxury.
The modern MSA
The trend of eating at restaurant type venues within MSA’s has declined and today’s customers prefer a shorter stop with an emphasis on food-to-go. Road users trust the brand they know and in order to facilitate their needs, MSA operators have forged links with various high street names such as M&S Simply Food, McDonalds, Burger King and Subway, to name a few.
With the relaxation of regulations, traffic signage can incorporate the logos of these retailers, which in turn drives visits to the MSA, thus higher revenues.
The days of a standard square ‘shed’ type building with basic facilities are numbered as road users demand a better experience from the service areas. This has come hand in hand with the rise of the ‘coffee culture’ and it is fair to say that virtually all retail offers within MSA’s are now franchised. Indeed, there is more customer choice than ever. For example, the coffee retailers, such as Costa and Starbucks, have numerous outlets within the MSA, enabling customers to stop at a restaurant, take away or simply drive-thru.
MSA’s are ideally positioned to take advantage of emerging retail trends and the adoption of operators to embrace the ‘Grab-and-Go’ concept proves their ability to adapt to a changing retail landscape. Even Wetherspoons trialled a licensed premises at the Beaconsfield service area on the M40, although this has yet to be repeated elsewhere.
The independent MSA
The game changed again in 2014/15 with the opening of Gloucester Services on the M5 between Junctions 11a and 12, which is operated by Westmorland. The concept is unique to them in that national retailers have been rejected in favour of local farm produce and independent cafes and restaurants.
However, it is the design of the facility that is to revolutionise MSA’s moving forward. The built accommodation blends seamlessly with its surroundings to include the sustainable grass roof. But more than that, the main amenity building did away with brash branding and instead incorporated wood effect styling and sweeping curves within the design of the building, rather than simply a big square box.
An example of a new facility following the Gloucester principles is the Leeds Skelton Lake Services, currently under construction by Extra and due to open in summer 2019. This facility has a grass clad undulating timber frame roof on the main food court building, as well as an additional 100 bedroom room hotel and petrol forecourt facility.
What does the future hold for MSA’s
With regard to new build activity in the MSA market, the development of new sites is naturally constrained due to the national coverage of existing sites. Furthermore, the need to commit high levels of capital expenditure on start-up costs, in conjunction with tight regulatory conditions, restricts new developments.
Whilst the regulations have relaxed slightly, for example, the strict spacing between motorway services by way of distance/drive-time can be overcome if there is a genuine ‘need’ for a facility in a certain location, the costs and time make it difficult for new operators to enter into the market. So whilst there are only six MSA operators within the sector being Welcome Break, Roadchef, Moto, Extra, Westmorland and EuroGarages, there is plenty activity and potential for further changes in the outlook of the MSA.
For further discussions or detail on Motorway Service Area’s do not hesitate to get in touch with the Automotive & Roadside specialists at Rapleys.
Rebecca joined the investment agency team at Rapleys in early 2014 and works with a variety of different clients throughout the UK. Advising on the acquisition and disposal of individual properties and portfolios, Rebecca primarily identifies opportunities, highlights asset management potential and provides valuation and rental advice to clients, principally focusing on the out-of-town retail, automotive and hotel sectors.
Prior to joining Rapleys, Rebecca worked for Edward Symmons where she spent three years in the hospitality and leisure team. She specialised in the hotel sector, valuing a large variety of hotels nationwide, predominantly for secured lending purposes. She qualified as a Chartered Surveyor in Spring 2013 having gained a detailed knowledge and understanding in the sector and wider property industry.
Contact: Mark Frostick | 07785 522958
Based in the Manchester office, Peter is responsible for all aspects of lease consultancy, Expert Witness and valuation instructions for the automotive and roadside sector within the north of the country. This includes motor dealerships, petrol filling stations and motorist’s centres.
Peter has a wealth of commercial and residential experience and has professionally represented a range of institutional landlords, corporate tenants, private individuals and financial institutions.
Peter joined Rapleys in 2002, was elected partner in 2012 and is a RICS Registered Valuer and a Chartered Environmentalist.
There has been plenty of activity in the automotive sector across the UK in the last twelve months and Scotland is setting the pace. From business acquisitions to site relocations and new build projects, the dealership market is changing and growing.
In the used car market we have seen a second CarStore open by Peter Vardy (in Dundee) and a Motor Store, by Arnold Clark which has taken the place of a former supermarket in Aberdeen.
Arnold Clark expanded in Edinburgh and Paisley after acquiring Phoenix Car Company representing Hyundai, Kia, Mitsubishi and Suzuki in the area. Also in Edinburgh, Synter have constructed a brand new Porsche dealership at Newcraighall.
Eastern Western’s impact can be seen clearly in Dundee and Stirling in particular, with the acquisition of Barnetts Motor Group. This includes Volkswagen and Mazda franchises (Dundee), as well as the acquisition of the Honda franchise from the Phoenix Motor Group.
John Clark have also been active in both Dundee and Stirling. The acquisition of the Morrisons, Land Rover,
Jaguar and Seat business in 2017 will be an asset to Stirling as they’ll no doubt develop a new ‘arch’ concept facility. In Dundee, they also take on the Volvo brand which we understand will be housed in the former BMW dealership once that has been successfully relocated to a purpose built facility.
This represents just some of the activity over the last couple of years but is representative of the consolidation in the sector. The drive from manufacturers for improved facilities has inevitably lead to the movement of franchises and some dealer groups disposing of their business.
We suspect that consolidation in the sector will continue over the next 12 months. Dealers will seek even greater efficiencies and the network concentration will remain in the core cities and towns, which will be supported by online sales and regional service centres.
Customers are traveling further to purchase cars and consequently demand in satellite towns is likely to decline from franchised retailers. However, this will create an opportunity for the used car market, as well as alternative uses, all of which will continue to drive value. For prime sites, these will become more critical for the franchises as they’ll continue to have a positive affect on land values. Rapleys have recently brought the former Volkswagen dealership in Dumfries to the market and it is already receiving good interest. The interest is not only from the automotive sector, but from other mainstream retailers and trade counter operators.
There continues to be speculation around the impact of online business on the traditional dealership model and clearly this is having a transformational impact on the broader retail economy. In our view however, we are still some way off from the bricks-and-mortar dealership being superseded altogether. Fundamentally customers still want the showroom experience and to kick a tyre or two before making a purchase.
Contact: Peter Nicholas | 07879 487646
Neil is a Partner in Rapleys’ town planning team and is passionate about providing clear, commercially informed planning advice to his clients.
He has an extensive knowledge and understanding of the planning system gained during more than 17 years’ experience within private sector planning consultancies in London, Leeds and Manchester. In this time, Neil has successfully advised clients in the private, public and voluntary sectors.
Neil has specialist knowledge and experience in the residential planning sector in particular. He has a proven track record in managing complex planning applications and appointing and leading large, multi-disciplinary consultancy teams on behalf of his clients. Neil is confident in leading negotiations with local authorities and key stakeholders. Neil has successfully represented clients at appeal as an Expert Witness.
Project experience includes:
‘Lookers car dealership boasts flat above – a one-off or a new mixed-use template, asks Nick Hughes’ – Property Week.
‘Standing three storeys tall beneath a block of modern apartments, Lookers in Battersea, south London, is not your average car dealership – on two counts. Not only is it the largest Volkswagen showroom in Europe, it is also part of what is thought to be the first UK mixed-use scheme to include a dealership.
The development has been the best part of a decade in the making and involves three key players: Lookers, developer Linden Homes and agent Rapleys, which brought the other two parties together.’
Angus Irvine, Head of Development Services, brought Lookers and Linden Homes together to achieve a balanced and innovative scheme in this desirable London postcode. Stretching back for several decades a dealership has occupied this site but Lookers Chief Executive, Andy Bruce, could see the dealership ‘being dwarfed by the rise of surrounding developments’ over the last few years. With no intention to sell the freehold of their site they turned to Rapleys to unlock the value in the land and in this area, the value was in upward development.
The result was a tower development scheme with 173 apartments and ‘a full-blown dealership with servicing. That’s why this is unique’ says Angus. To overcome the challenges the multi discipline Rapleys team, led by Angus, brought together experts from across the firm’s Development, Planning, Investment and Building Consultancy practices to work with Lookers to maximise the significant land value of the site.
Rapleys’ Automotive & Roadside team have been very active in East Anglia with support from the recently opened Cambridge office. In the attached newsletter are some examples of recent automotive instructions – you can also click here.
The team can advise on the full spectrum of property services on a confidential basis. For full details of all available properties click here.
Mark joined Rapley’s automotive and roadside team in 2003 and has wide experience within the sector. He has advised on over 1000 petrol stations for clients ranging from major oil companies to sole traders. His dealership experience is just as varied having acquired and disposed of sites throughout the UK.
Following his graduation from Nottingham Trent University, Mark spent 6 months working in the professional department of King Sturge’s Bath office. He also gained experience working for Colyer Commercial, a small regional practice located in Ashford, Kent, and in Barbers’ commercial department in Telford.
Rapleys’ Automotive & Roadside team have been very active in East Anglia with support of service lines offered from the recently opened Cambridge office. In the attached are some examples of recent petrol filling station and roadside retail instructions. Click on the download button for full details.
For our full list of available properties click here.
Upcoming petrol retailer group RBK Services has acquired the former Co-Op petrol station in Ramsey, Cambridgeshire, and plans to re-open the site.
Rapleys were appointed by Central England Co-Op to market their site once they had let their former superstore in Ramsey to Poundstretcher.
“Despite the site being closed, we had strong interest in the location and competitive bidding before finalising a deal,” said Mark Frostick, Senior Associate of Rapleys Automotive & Roadside team. “Operators are still seeing a lack of supply in the market and we continue to be able to market well-priced sites across the country and price ranges. It’s also great to see another site re-open.”
Ratnasingam “Bala” Balakrishnan, the MD of RBK Services Ltd, commented: “I have some major plans for the site once it has re-opened and rebranding and redecoration will soon have the site back to historic trading levels. The following services will be available to the public: a filling station with off licence, tyre centre and a hand car wash, as well as weekend cut price fuel and gas oil available at a reduced price for a limited time.”
Jonny’s role is to advise pension funds, financial institutions, property companies and private individuals on the sale, purchase and funding of income producing UK commercial property.
Although the majority of work is transactional, Jonny’s role is to advise UK and overseas clients on their property portfolios. Advice typically constitutes guiding property values, highlighting asset management potential and analysing properties for purchase and exit strategies.
Clients include: AXA Real Estate Investment Managers, Palmer Capital Partners, RREEF (now Deutsche Asset & Wealth Management), Threadneedle Property Investments,TH Real Estate, Moorfield Group, Palace Capital plc, CCLA Investment Management, Siemens Real Estate, Wm Morrison plc, Central England Co-Op, Disney Inc, Malthurst Group, Mercedes Benz, Sytner Group, Lookers plc, Johnston Press plc, Milton Keynes Parks Trust, John Lewis Partnership, Pendragon plc, Bolling Investments, Marshall Motor Group, Musgrave Retail Partners (now Tesco), C2 Capital, Private Investors and Chubb Common Investment Fund (in-house fund).
Jonny specialises in working with private equity groups, property companies and HNWI’s on value added deals which typically involve repositioning of assets by active asset management, refurbishment and redevelopment angles. Experience also extends to large mixed-use developments, especially where anchored by PRS.
Jonny joined Rapleys in 2006 and became an associate in 2010. He was promoted to partner in 2015. Thus far, Jonny has acted on in excess of £1bn of transactions.
Jonathan is a senior associate and has a wide range of experience across a number of property sectors including residential, retail, commercial, and automotive & roadside development.
The work he has undertaken includes the project management of major planning applications, planning appraisals to assess the development potential of sites, the identification and promotion of strategic land sites, and planning appeals.
He has experience advising a wide range of clients including national retailers, house builders, asset managers, private developers and corporate clients.
Jonathan joined Rapleys in 2012. He previously worked for North-West based planning consultancy NJL Consulting LLP.
The last market update, in February 2018, was delivered as the potential takeover of MRH by MFG was announced. At the time we predicted corporate activity would remain high and as we reflect and look forward, that is certainly still a strong theme within the industry.
Since the takeover of MRH by MFG we have seen many changes. Petrogas’ takeover of Welcome Break (reflecting our prediction of the market looking at Motorway Service Areas); Harvest Energy purchasing HKS; Phillips 66 buying NJB group; and Cretas acquiring 6 sites from David Taylor Forecourts.
These changes have seen a number of oil companies joining the likes of Esso, BP and Shell in both offering supply agreements and retailing directly themselves.
Elsewhere, the independent operators (Indies) have continued their growth both in this country and abroad with acquisitions in the USA, Italy and Australia for Euro Garages. Other Indies have continued to look to acquire sites in the UK however, there remain relatively few opportunities on the open market – as has been the case for the last few years.
The corporate acquisition currently hitting the headlines, which potentially has the biggest effect on the market, of course is Sainsbury’s buying Asda, and it hasn’t even happened yet. The CMA has been investigating the potential issues of this deal and the initial report was fairly damning. The CMA predicted that the merger would lead to fuel price rises, which presumably reflects the different pricing policies that the two supermarkets currently run. That said, it does also suggest any site currently close to an Asda petrol station might be seeing better margins in the future, if the sale does take place.
The total number of operational sites has again been relatively stable with a net closure of only 12, after 70 new sites opened, or re-opened. We expect this trend to continue and indeed we recently let a site that had been closed for over 15 years! There have also been a number of sites that have been knocked down and rebuilt, refurbished or extended. We expect this process to continue as forecourts continue to modernise in line with customer expectations.
The last 12 months have also seen an increase in collaborative work with our Planning team on several sites. Looking at extending opening hours, which will only add to the potential for operators to improve trading.
Outside of corporate and property acquisitions, the market has seen a few other changes. In June there was a massive 6p jump in the price of a litre of unleaded – it is worth noting since then prices have stabilised.
Electric charging has continued to grow with Tesco tying up with VW and BP’s acquisition of Chargemaster. Whilst electric vehicles are still only a small part of the market we expect that this will continue to grow and petrol stations will look to incorporate those on sites where there is a market for charging.
Going forward, we expect 2019 to be more of the same; corporate acquisitions, demand for new to industry sites and potential for existing sites to improve with new options.
However any prediction of 2019 can not avoid the looming presence of Brexit. At the time of writing, nothing had been decided and we haven’t seen signs of any major effects on the petrol retailers. The effect on the economy as a whole is more likely to be an issue than to retailers themselves in the long term, but like everyone at present, it’s a wait and see situation.
If you are looking for further sites or currently have a site that you need advice on do not hesitate to get in touch.
James is a partner in the building consultancy team and has a broad range of experience across all mainstream areas of commercial building surveying.
He specialises in management of refurbishment projects, preparing and negotiating dilapidations claims on behalf of both landlords and tenants, undertaking pre-acquisition and technical due diligence building surveys and advising on Party Wall matters in both residential and commercial schemes.
James has project managed refurbishments valued in excess of £8million and negotiated numerous large dilapidations claims on behalf of various clients ranging from pension and investment funds to top global brands. James has also acted for both Building and Adjoining Owners regarding complex party wall schemes and undertaken building surveys on various prestigious commercial properties ranging from small scale to hundreds of thousands of square feet in size.
Commercial property and planning consultancy Rapleys has advised Lookers PLC on the development of its new £10m dealership located on York Road, Battersea.
The 90,000 sq ft Volskwagen dealership forms part of a multi-million pound mixed-use joint venture between Lookers and Linden Homes. The state of the art dealership comprises the first three floors of the development, including significant amenity and customer experience space as well as a state-of-the-art automotive services department.
The multi discipline Rapleys team, led by partner Angus Irvine, brought together experts from across the firm’s Development, Planning, Investment and Building Consultancy practices to work with Lookers to maximise the significant land value of the site.
Principally this included a full planning and feasibility study, resulting in the unlocking of air rights to facilitate a multi-storey, mixed-use development comprising both the car dealership and a residential scheme. Rapleys identified and secured Linden Homes as the joint venture partner for the project, subsequently securing planning permission for the full commercial and residential scheme, to include 174 one, two and three-bedroom apartments, both private and affordable, across the fifteen storey, four tower development.
Rapleys also advised Lookers on relocating the existing dealership to an alternative site while works were being undertaken, to minimise any disruption to the day-to-day business.
Angus Irvine, Partner and head of Development, commented: “As competition for land, particularly in urban conurbations, increases, it is critical that investors and developers have a creative approach to maximising the value of their assets. Frequently this means changing or expanding uses and more often than not, building up rather than out. Lookers’ new dealership is a terrific example of this; maintaining and enhancing commercial operations while delivering much needed private and affordable housing in the heart of London courtesy of JV partner Linden Homes.”
Geoff is a senior member of the automotive and roadside team regularly representing clients in rent reviews, lease renewals and dispute resolution, and often being asked to provide strategic and valuation advice at the highest level. Geoff also handles agency instructions, having completed acquisitions across all of our specialist sectors including petrol filling stations, motor dealerships, fast fit/workshops, car parks, development land and car rental. Geoff’s activities are primarily in the southern half of the UK, however he is able to provide support and expertise nationally on larger corporate projects as necessary as well as dealing with car park related work nationwide.
Geoff handles instructions for a wide range of investor and occupier clients, frequently acting as an Expert Witness in rent review disputes. He is a Chartered Environmentalist, an RICS Registered Valuer and a capable speaker on technical and sector based issues to both professional and corporate audiences.
Dave has substantial experience in commercial building surveying advice, particularly in respect of the repair and maintenance obligations and strategic dilapidations advice for property owners and occupiers, including the preparation of planned preventative maintenance programmes.
He is an expert in preparing and negotiating dilapidations claims, pre-acquisition due diligence advice for freehold and leasehold properties, and strategic planned preventative maintenance/lifecycle cost advice. He also has extensive experience of monitoring developments on behalf of funding institutions, project management and contract administration of maintenance alterations and refurbishment fit out works as well as construction health and safety advice (CDM).
Prior to joining Rapleys in 1993, Dave worked across a range of developments in both Central London and the regions at a city based, multi-disciplinary practice.
Dave was elected a partner in 2000.
Rapleys’ property and planning consultancy continue to deliver on their ambitious business development plan with the announcement of the latest office move for the Edinburgh team.
The team moves to Rutland Square this week, after a decision was taken not to renew the lease in Caledonian Exchange. The move provides Rapleys with superior accommodation that better suits their needs as well as a growing client base. By stepping over into EH1, Rapleys are at the centre of the commercial property market in the city and ultimately their valued clients will benefit from this accessible and vibrant location.
The key service lines offered from this hub are Town Planning, Corporate & Investor Management, Business Space, Retail & Leisure and Automotive & Roadside. With local knowledge and national insight from the wider network of offices the professional teams provide comprehensive property and planning solutions on a value-added basis consistently.
Colin Steele, Partner and head of the Edinburgh office, comments: “this move comes at a great time as we continue to expand the team and service lines available here from our Edinburgh hub. On a wider practice level, the last 12 months have seen many of our regional offices move up and on to better spaces, improving the environment for the benefit of colleagues and clients alike. It is great to align ourselves to the overall business development plan and we will continue to offer the excellent, local services that our clients value us for, from this new location.”
Robert Clarke, Senior Partner adds: “I am delighted with the new office space at Rutland Square. It is a recognised and established business address in the heart of the city. Needless to say, we look forward to welcoming clients to, and advising from, our new home in Edinburgh.”
Full contact details for Rapleys Edinburgh
0370 777 6292
Daniel is a partner in the automotive & roadside team specialising in both agency and professional matters including acquisitions, disposals, rent reviews, lease renewals, general landlord and tenant work, and valuations on properties throughout the UK. His particular specialism is within petrol filling stations, motor dealerships, roadside retail and workshop premises. He is also a RICS Registered Valuer and RICS APC Assessor.
Daniel advises a variety of institutional and occupier clients including Pendragon plc, Mercedes-Benz Retail Group, Sytner Group, Network Rail, Columbia Threadneedle, Majestic Wine, Topps Tiles and Universal Tyres.
Daniel previously worked at Mouchel on the Bedfordshire County Council portfolio including general agency and landlord and tenant matters, and prior to graduating in 2003, Daniel completed his placement year at Bidwells, working with the agency and corporate consultancy/valuation departments.
Property and planning consultancy Rapleys announces the launch of a new office in Cambridge. The new office is Rapleys’ second in Cambridgeshire, with the firm being founded in Huntingdon and maintaining a strong presence and heritage in region since 1951.
The Cambridge office consists of both professional advisory and transactional teams from across Rapleys’ service lines, delivering a joined-up, multi-disciplinary offering to clients in the region. Each team consists of professionals who live and work in the city, with strong established relationships across Cambridge’s range of complementary consultancy services.
Stuart Harris has been appointed Head of the Cambridge office, and joins Rapleys with more than 30 years’ experience working in the industry and region, including roles with Strutt & Parker and Carter Jonas.
Stuart, alongside the existing partnership, will be responsible for promoting and coordinating the delivery of the firm’s core property consultancy and town planning services in the city, including: Town Planning, Building Consultancy, Development, Affordable Housing & Viability, Commercial Agency, Landlord & Tenant and Investment.
Robert Clarke, Senior Partner at Rapleys, commented: “Our new Cambridge office, alongside the appointment of Stuart, represents a key further stage in Rapleys’ evolution, which builds on our long-established heritage, presence and reputation in the region going back to the founding of the firm in Huntingdon in 1951. We saw a real opportunity in Cambridge, which is undergoing substantial growth, and a market opening where we can bring in services – such as Affordable Housing and Viability, Strategic Land, Building Consultancy and Town Planning – which are currently underrepresented in the region or are subject to increasing demand. At the same time, our expanded footprint and capacity in the region further complements our national expansion programme – providing clients access to partner-led teams with both local expertise and UK-wide reach.”
Stuart Harris, Head of the Cambridge Office at Rapleys, added: “Principally I am delighted to join Rapleys at this exciting juncture. There are significant opportunities in Cambridge, which is rapidly increasing in commercial importance and is one of the fastest growing cities in the UK. This looks set to continue – not least driven by the wider strategic plan for the region including the Cambridge-Oxford arc and expressway – and we are seeing an increasing demand particularly for planning and consulting services from businesses seeking to capitalise on this growth. I look forward to working with the wider Rapleys team to help clients seize these opportunities.”
Rapleys’ Cambridge team can be contacted at 20 Station Road, Cambridge CB1 2JD / 0370 777 6292.
Chloe joined Rapleys in 2013 after graduating with a Masters in International Planning from the University College of London. In 2016, she gained her town planning chartership and is now an Associate working within a range of sectors including automotive and roadside, industrial and distribution, office, residential and retail. Specifically, Chloe is also responsible for overseeing planning matters on a portfolio of sites on behalf of BP Oil (UK) Ltd.
She specialises in development management, completing site appraisals, policy representations, planning statements, and preparing and managing planning applications and appeals. Over the years, Chloe has been able to establish beneficial working relationships with technical sub-consultants which have provided her clients with cost savings. Notable clients that Chloe has worked with include Associated British Foods, Bellcross Homes, BP Oil (UK) Ltd, Frontier Estates Ltd, Linden Homes, Lookers Plc, and The Jockey Club.
Chloe can offer carefully considered professional consultancy advice and has extensive experience in recruiting for and leading on project teams to promote and protect her clients’ interests.
Alan has many years experience in dealing with rating valuations of all types of commercial property from both the public and private sector.
Alan has appeared before the Valuation Tribunal on many occasions, acting as Advocate and Expert Witness.
Having worked extensively on both sides of the rating fence, Alan has a thorough understanding of the complexities of rating and the various ways that clients’ rates liabilities can be minimised.
Alan joined Rapleys in 2006, having previously been a partner at Fuller Peiser and a director at Evans & Payne from 1989 until he left in 2006.
Alun is responsible for a wide range of development related issues, including urban regeneration projects, site disposals, site acquisitions for property developers, development audits/appraisals and agency advice. He has considerable experience in setting up joint ventures.
Alun has extensive knowledge across all sectors of the market including residential disposals and acquisitions, food and non-food retail schemes, industrial and office developments and in particular has been involved in a number of major mixed-use developments.
Alun joined Rapleys in 1997 and was elected a partner in the development team in 2000. Prior to this he worked at Railtrack Property and the British Rail Property Board.
Rapleys acquired a site, of circa 2.4 acres, for a new build dealership to be fully compliant to Ford’s corporate identity. The site includes a 6 car showroom, 10 bay workshop, parts store and a fully surfaced site for used car display and new car storage.The client needed the project delivered in 12 months due to relocation.
The client’s previous site was sold by their landlord and therefore they had to relocate relatively quickly. Rapleys were appointed to acquire the site, successfully finding somewhere suitable for redevelopment and terms were agreed on a subject to planning basis. Once planning was approved, Rapleys acted as Lead Consultant, procuring other consultants services, and Project Managing the delivery of the new dealership.
Successfully managed the project team, delivered the brief on time and on budget to the clients satisfaction.
Rapleys is delighted to announce that real estate investment company Aprirose has sold the former Volkswagen dealership on Edgware Road to Jemca.
The 19,859 sq ft site was originally marketed to let, but after being inundated with bids and following an offer from Jemca, Aprirose chose to move forward with the sale. The location of the site was a big draw for potential buyers with the property situated in a prominent position amongst other big-name retailers.
Heading up the deal was Rapleys Automotive and Roadside Partner Daniel Cook and Paul Taylor from Latitude Real Estate advised Jemca.
Daniel commented that the circumstances surrounding the sale “demonstrate clearly the difficulty car dealers are having in finding suitable premises as they now have to compete with not only potentially higher value uses, but also the investment market in order to locate to an appropriate site.”
Published in MotorTrader.com
It could take until next year to get a final picture on how and where a merged Asda/Sainsbury’s business will have to dispose of sites (stores and petrol stations), according to Mark Frostick. Mark states it will be an even longer term before a final position on pricing is agreed, so, for now, it will be a question of wait and see.
It is likely that the majority of the petrol stations that the new company will operate will be dependent on the food store attachment. In terms of potentially disposed properties, with the discount stores still held as most likely purchasers, the likelihood of them keeping the petrol elements operational seems very slim indeed. However, it is early days and the outcome could still prove unpredictable.
Mark expands on his expert opinion of the market and the possible outcomes of this merger in the full article in Forecourt Trader here.
Phil Blackford, head of automotive and roadside, shares his opinions with The Grocer on how independent fuel suppliers have partly benefited from the majority of oil suppliers exiting direct fuel retailing. ‘This gap in the market has given the independents almost free reign to expand.’
There has been a fundamental rethink from the forecourt traders and the retail offering they want to make, moving away from the ‘mags and fags’ to the more sophisticated convenience offering of local produce, craft beers and artisan breads. This shift has opened up the forecourts offerings with ‘food to go’ options increasing also (for example Applegreen’s partnership with the likes of Chopstix Noodle Bar) the forecourts are switching to an attractive destination.
Rapleys’ Automotive and Roadside team has strengthened its northern presence with 3 new additions to the team; Stuart Lobb, William Seddon and Peter Paphitis. They are all based in our new Manchester home at 55 Spring Gardens and will enable us to service an ever increasing workload across all property disciplines. Our specialist sector offering also extends to planning, rating, building consultancy and project management and investment. In this newsletter we highlight some of our recent successful transactions showing the range of work we undertake in the sector.
Click here for the full newsletter.
Jardine Motors Group has completed the sale of the company’s former Jaguar Land Rover dealership in Slough, Berkshire. The building was available due to Jardine relocating to a nearby purpose-built 42,000 sq ft JLR dealership.
…Mark Frostick, senior associate at Rapleys added: “This clearly shows that in spite of negative headlines about the automotive market in the press, there remains a market in the press, there remains a market for prime freeholds from the sector.”
For the full story go to motortrader.com
Top 50 Indie Karan Retail has secured the lease on the BP-branded petrol filling station fronting the A2 at Bapchild just outside of Sittingbourne, Kent, in a deal arranged by Rapleys.
…Damien Lippet commented ‘due to the client’s requirements the property was offered confidentially to the market. However, opportunities to acquire well-established forecourts such as this are relatively few and far between in the south east…’
For the full details click through to Forecourt Trader.
Daniel Cook shares his opinion with AM Online about how the decision Vauxhall has taken to ‘rationalise’ its network of dealerships may have come as a shock, but does this really indicate the death of the bricks-and-mortar dealership model?
Parallels could be drawn between various retailers, like Toys R’Us and Carpetright, who have felt the strain on being tied into properties but the dynamics of the automotive trade are very different.
Click here to read more from Daniel.
According to Daniel Cook, partner in the Automotive & Roadside team at Rapleys, the market may have topped out. “Looking at the UK market right now, there are signs that dealership values may have peaked. Fundamentally, there is an increasing quantity of dealership properties on the market, largely driven by the volume franchises who are looking to streamline their portfolios.”
The full article can be found in Motor Trader or by clicking here.
Rapleys’ Automotive and Roadside team are active throughout the UK but with the opening of our Birmingham office in May 2016, our presence and activity has further strengthened in the West Midlands. We highlight here some of our recent successful transactions showing the range of work we undertake in the sector.
Experience includes site acquisitions, project management, lease renewal, planning services and much more. We pride ourselves on providing an unmatched continuity of service and high level of expertise and knowledge to all, from an independent car dealer to a nationally represented client.
The year did record a slight drop in petrol filling station numbers. This was however marginal, at just 52 fewer sites, down to 8,407 (source: Experian Catalist Market Summary Report Nov 2017). We expect a number of these are small local unbranded sites and we do continue to see a steady flow of closed down sites also re-opening. Rapleys has transactions in solicitor’s hands for a number of sites to reopen, including a site that has been closed for almost 15 years! We expect to see more new to industry sites developed and existing stock redeveloped.
Demand for sites across the board remains strong and the lack of available stock is continuing to keep both freehold and leasehold prices high. As margins remain strong this is likely to continue. If the backlash against diesel continues there could be some change in the nature of fuel demand but we have yet to see this have a significant effect.
In terms of the major news, we have continued to see the top dealer groups expand and at present MRH, Motor Fuels, Euro Garages, Rontec, Co-Op and Petrogas operate approximately 20% of all Petrol Stations in the country. Their numbers have been boosted by corporate takeovers of a number of the smaller groups within the Top 50. Examples include, MFG acquired Golden Cross in January, MRH acquisition of Chartman in September and Applegreen acquiring 7 sites from Carsley Group. At current rates there may not be enough groups to form a top 50!
However, in terms of numbers, Euro Garages have acquired the most by going global. Having started from a single site in Bury in 2001 they have now expanded into Europe to become the largest retail customer of Esso. They are looking further afield with the recently announced $2.15 bn deal to acquire 762 sites in the US from The Kroger Co. which suggests that the two questions are:
a) where are they going to acquire next?
b) if they are looking at the US will they have to change their name!
The last 12 months have also seen the supermarkets revisiting tying up with existing fuel operators, and again this has been met with mixed success. Recently we have seen MRH tie up with Co-op, Euro Garages with Sainsburys and Morrisons with Rontec, however of these only the latter is still on-going after a trial period. This would appear to be due to operational issues rather than a bad idea and we expect further tie ups are likely to be trialled in the future.
We have also seen the return of demand for Motorway Service Areas. There have been relatively few new developments in recent years with the new services on the M5 at Gloucester being the only notable exception. However, we are now seeing announcements and planning applications on a number of new locations throughout the UK. Applegreen are possibly the most active as they look to replicate their success in Ireland.
Looking forward, the recently announced deal merging MFG and MRH could lead to a new level of super group with almost 1,000 sites. It’s too early to confirm the fallout of this deal but we could see its ripples felt for a long time.
We predict that the market will continue as the last 12 months with demand for sites to continue, corporate activity to be high and more sites to open. The last few years have seen changes and growth and we expect this to continue through 2018 and into 2019.
With Q1 2018 drawing in, Rapleys’ Investment team are pleased to be reporting a number of significant investment transactions. Whilst all sectors show growth and strength, it is the automotive investments that have risen to prominence for Rapleys.
Download the newsletter to view some of the deals secured and ongoing work in this area.
The Minimum Energy Efficiency Standards (MEES) regulations come into force in two months’ time. From 1 April 2018, commercial properties must have a minimum Energy Performance Certificate (EPC) rating of ‘E’ or above in order to be let. The MEES regulations will apply to the renewal of existing leases and may also have an impact upon future lease events, such as rent reviews and break options occurring after 1 April 2018.
The changes in MEES regulations are likely to affect property owners and existing tenants throughout the UK. So, to minimise the impact, forthcoming lease event dates for any sub-standard property should be identified quickly.
Firstly, landlords would be well advised to ensure that lease renewals for properties with an ‘F’ or ‘G’ rating are completed before the MEES regulations become mandatory on 1 April 2018.
Landlords should also ensure that new leases restrict a tenant from obtaining a new EPC, other than for when one is actually required i.e. in connection with an assignment or the grant of a subletting. This is because a new ‘F’ or ‘G’ rated EPC obtained by the tenant may place an obligation upon the landlord to carry out improvement works in order to bring a sub-standard property up to the minimum ‘E’ rating. Equally, landlords should ensure that sufficient rights are reserved in new leases to enable them to enter the premises in order to carry out any works that may be required.
Where existing leases contain breaks which may be effective after 1 April 2018, we would advise landlords to establish that the EPC rating of the property is ‘E’ or above. Again, if this was found to be sub-standard it would place an obligation on the landlord to carry out improvements to enable the property to be re-let. Tenants will no doubt appreciate that this situation could also assist them during negotiations with the landlord over whether or not to exercise a break.
For ‘F’ or ‘G’ rated properties that are subject to rent reviews occurring after 1 April 2018, whilst a letting might not be possible in the real world without energy efficiency improvements being carried out, a number of questions may arise in the hypothetical world of the rent review:
It is therefore essential for both property owners and tenants alike to consider the impact the MEES regulations will have on future lease events.
Rapleys can help with this and if you require any further information, please contact Tim Holt.
The fuel forecourt market has seen major changes in recent years. Roadside development has increased with more innovative and customer focused sites being built and there is now high demand for land adjoining main roads – from which landowners could capitalise.
The oil companies have generally been retreating from direct retailing, deciding instead to supply to independent (indie) operators trading under the traditional fuel banners. Some of the largest indie groups are backed by significant international private equity money and are driving up values. They are looking for new-to-industry sites in prominent locations of 0.25 acres upwards. Demand is for both freehold and leasehold options and values often outstrip existing use value significantly.
There is a strong demand for sites across the whole country, along both existing and newly planned main arterial roads.
To drive profit and value from the sites, innovation has been key. Partnering between fuel operators and well known retailers is now evident across the UK with the likes of Subway, Costa, Greggs, and Starbucks regularly appearing within the wider forecourt developments. Likewise, the indies are also tying up with supermarkets including Morrisons and the various Co-Op groups.
Demand for sites
With new road building and town expansions taking place nationally, there has never been a better time for land owners to take advantage of the insatiable demand from fuel operators. Where gaps in the national forecourt network exist, land values for roadside development have never been higher.
Having been involved in the development of forecourt sites through planning, agency, project management and investment disposal, we have been able to take part in the market changes as they have progressed and recognise the exciting opportunities which lie ahead. With a sound knowledge of this market, we are best placed to help evaluate site suitability and its potential.
If you know of any suitable sites or would like more information, please contact Philip Blackford.
Forecourt Trader 25/10/2017
“Plans to force motorway services and large petrol retailers to install electric charge and hydrogen refuelling points under a new Bill being introduced in Parliament, could cost the industry millions, depending on the definition of ‘large’, according to Mark Frostick, senior associate in Rapleys’ automotive and roadside team.”
Frostick predicts that the costs could amount to £250m for the industry.
Read the full article on forecourttrader.co.uk
Automotive businesses are swiftly realising that traditional retail models are no longer sufficient.
Technological convergence is rapidly accelerating change in the motor retail sector and is leading to a significant evolution in strategy.
Mark Frostick, senior associate in Rapleys’ Automotive & Roadside team, recently spoke to IMI Magazine (The Institute of Motor Industry) about how and why automotive businesses should alter their product offering to keep up with changing customer needs.
He states that “as the notion of the dealership and wider forecourt experience continues to evolve, diversification will play a central role and undoubtedly opens up a world of possibilities for additional income, new customers and less risk.
However, they must be planned for and implemented strategically, with a careful eye towards the long-term management of the business and its property assets.”
Click here to read the full article published in IMI Magazine and find out more about diversification in the automotive sector.
For more information, please contact Mark.
Although the majority of the delayed Queen’s Speech, and the media coverage of it, was predictably focused on Brexit, some development related matters were squeezed in.
Readers may recall that the Housing White Paper, published in February, identified the nation’s “broken” housing market as one of the “greatest barriers to progress” in Britain today. Notwithstanding this, the need for more homes was restricted to one passing reference in the speech, as an add-on to non-development related property reforms.
There is a commitment to delivering the reforms proposed in the White Paper, but this is only outlined on two thirds of a page towards the end of the background notes of the speech. There is little detail about how this is to be achieved, except for an implication that any initiatives will be pursued through non-legislative means.
In contrast to fixing the housing market, encouraging the adoption of electric vehicles is considered by the Government to be worthy of new legislation. The thinking behind this is perhaps difficult to argue with, but a part of the proposal is a requirement for motorway service areas (MSAs) and “large fuel retailers” to provide electric vehicle charge points.
Most MSAs have already installed charging points, but the vagueness of, and the potential financial burden arising from, the second category of facilities has already caused some concern in the industry. If “large fuel retailers” refers to operators, rather than individual facilities themselves, this could have a significant and detrimental impact on smaller and tighter sites, as few amenities can be offered whilst charging takes place, and space is already at a premium.
Also benefiting from its own bill is the next stage of the HS2 link between Birmingham and Crewe. The bill will include details relative to compulsory purchase of the land required to deliver it, as well as granting deemed planning permission to deliver the scheme (with the details to be developed in coordination with the relevant local authorities).
Although most recognise that Brexit will consume much of the Government’s time over the coming years, the Queen’s Speech suggests that development is now quite low on its list of priorities. This is particularly true of housing, which the Government itself has identified as one of the largest matters that Britain needs to address. If this is the case, at the very least one can anticipate a continued gap between development pressure and local appetite (in much of the country) for it.
As ever, time will tell – Rapleys will continue to keep a close eye on the situation, and keep you informed of developments as they emerge.
The recent announcement that PSA Group, who own Peugeot and Citroen, will buy Vauxhall and Opel from their parent company General Motors for £1.9 bn will see the creation of the second largest car manufacturer in Europe (behind Volkswagen Group).
Vauxhall have 333 dealerships in the UK* along with major production plants at Ellsmere Port and Luton. The chairman of PSA, Carlos Tavares, has already suggested savings will be made of £1.47 billion per annum by 2026.
However going forward what could the effects be on the property market?
We are unlikely to see the wholesale closure of dealerships across the UK. In recent years there has been a trend for manufacturers to split their brands in terms of properties, whether this is separate sections of the same building or indeed totally separate buildings. There could be some scope for Vauxhall dealerships to incorporate the other brands into their sites, especially where they have previously had other GM brands such as Saab or Chevrolet. Given Vauxhall had just over 10% of the UK car market in 2015**, it’s unlikely that the brand will disappear and there is the potential for new investment and growth.
However it is unlikely we will see any major moves in the dealership market in the short to medium term.
Where we expect there could be change is in the non-retail properties. Citroen recently sold their HQ in Slough and relocated to Coventry to share premises with Peugeot. We could foresee a similar situation with Vauxhall relocating some functions from its spiritual home in Luton.
The topic of Luton is probably the biggest question mark. With the new owners looking at costs and the general consensus that the enlarged group now has too many manufacturing facilities, this could be where the major effect on property will be felt. If one of the UK plants was to close, it is not only the plant itself which would be affected but all of the supporting infrastructure, from the manufacturers of parts to the workers in the nearby sandwich shop. However the effects of a hard or soft Brexit are likely to have an impact on the final decision on any plant’s future.
Property investment could benefit from the takeover as the growth in the size of the company could lead to further investments, possibly the redevelopment of old sites for new state of the art facilities or even a relocation of all brands in a town to a single larger bespoke site. If the new owners can return Vauxhall (Opel) to profit, making their existing properties a more attractive investment, we could see the hardening of yields.
From a landlords perspective, the vast majority of Vauxhall dealerships have been run by national franchise dealer groups on a leasehold basis. Any landlords who own one of these investments, with a short or medium term lease in place to a franchise group on a Vauxhall site, should consider the chance of the enlarged PSA group rationalising their portfolio. In this case, Rapleys’ Automotive & Roadside team are on hand to discuss a range of likely options for your asset.
For any further information, please contact Mark Frostick.
**Source: Car Magazine
Rapleys is pleased to share some of our most recent agency transactions in our latest newsletter.
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Property Week 20/01/2017
Most of us contemplate any dealings with a car salesman with a sense of dread. Sure, you get a car at the end of it, but first you have to endure an over-enthusiastic dealer, hell-bent on expounding the merits of heated car seats whether your budget allows it or not.
Not any more. These days, more and more car manufacturers and dealerships are electing to trade from shopping centre malls and high streets where they can offer customers something more experiential and informal – and, crucially, using less space.
Daniel Cook, Rapleys Senior Associate from the Automotive & Roadside team provides comments on new shopping centre showrooms and what threats they have on traditional showrooms.
Read the full Property Week article click here
Decent sites are harder to come by so will we see more new-to-industry (NTI) developments?
After a year of big merger and acquisition stories – Euro Garages with EFR (European Forecourt Retail Group) and MFG’s purchase of Synergie Holdings and Roadside Group to name just two – the verdict on the forecourt property market is in. Last year was a good one, demand is still strong but it’s a lack of supply that’s the problem.
Mark Frostick, associate in Rapleys’ Automotive & Roadside team, discusses ground sites and their potential costs. He states “Yes, we’ll see more NTI, out-of-the-ground sites, but the problem is the cost of them, what with the price of the land and the building etc.”
To read the full Forecourttrader.com article please click here.
From Trump to Brexit, 2016 was a year full of shocks and surprises, with experts and commentators wrong footed. Predicting 2017 is, therefore, difficult at best, if not foolhardy.
There are, though, some trends and flashpoints which we can be sure will impact on the motor trade next year.
Firstly, demand for property is likely to remain high with a large number of requirements for both franchised and used car sites remaining unfulfilled.
The biggest issue here looks set to be the continued lack of available sites, either existing or in development, and this challenge will likely set much of the agenda for 2017.
Meanwhile, with the changes in environmental certificate (EPC) requirements being introduced in early 2018 we might expect to see some landlords looking to let less energy efficient premises at a discount towards the end of 2017, before they have to comply with the new regulations.
Mark Frostick, Rapleys Associate in the Automotive & Roadside team, provides the blog for Motortrader.com
Read the full blog from Motortrader.com click here
The total number of parking spaces in the UK is estimated at between 8 million and 11.3 million and we consider that the car park sector is a property asset class worthy of close attention. According to the British Parking Association, the c.2,250 public parking facilities operated by local authorities throughout the country generate an estimated turnover of £1.5 billion.
Rapleys are experts within the car park sector and bring specialist knowledge to each opportunity. We have successfully completed a full range of instructions from rent reviews to acquisitions, compulsory purchase and investment brokerage for a large range of clients, a selection of which are shown below.
To read the full newsletter please click here.
Brexit: an event that, at the time, felt a little as if the world was about to end. We are nearly 5 months on from 25 June 2016 and whilst turmoil in foreign exchange continues with the pound predicted by some to reach parity with the Euro over the next few months, the FTSE has reached a record high.
However, so far there appears to have been little effect in the automotive sector with both corporate and property deals continuing with some high profile (and costly) examples including:
Of course these deals will have been planned and financed well in advance of the Brexit date but during the preceding period of uncertainty, the strength of the UK economy appears to have vindicated those approving these high profile deals. Indeed further significant developments are continuing to be announced post-Brexit including:
Furthermore, since our last automotive update, the sector has seen the largest corporate acquisition for 10 years with Marshall Motor Holdings acquiring Ridgeway for £106.9m to become the 7th largest group in the UK; an acquisition where Rapleys was appointed to advise on the property elements of the acquisition. There have also been a number of others, both pre and post Brexit, including:
It remains to be seen what impact Brexit will have as Article 50 has yet to be exercised and, given recent court rulings, there is uncertainty as to whether the Government can make this decision without the support of Parliament. Many groups are yet to report their half year results although market sentiment has, so far, generally been positive. It seems as if most in the sector remain confident about the state of the UK economy and that confidence has translated into investment in the sector at a time when the temptation might have been to “sit tight”. It is, however, widely anticipated that Article 50 will be exercised in the first half of 2017 and, if this is the case, we will be in for another round of uncertainty next year.
McDonald’s and Metro Bank are not obvious competitors, yet when it comes to securing sites for new drive-thru outlets the two may soon be going head to head.
Drive-thrus have traditionally been the preserve of fast-food chains whose customers appreciate their speed and convenience, but in recent years there has been a notable increase in new drive-thru concepts outside the food and beverage (F&B) sector.
Metro Bank opened its first drive-thru in Slough in 2013 allowing customers to drive up to the bank and carry out transactions without leaving their vehicles.
The pilot proved so successful that last October, the company opened its second drive-thru in a retail park in Southall, west London, which like its Slough branch is located close to a busy main road.
Metro Bank says it is actively on the lookout for more suitable drive-thru sites. But is Metro Bank the exception that proves the rule that drive-thrus are best left to the fast-food giants?
Intuitively, a drive-thru retail bank where customers can make physical transactions goes against the direction of travel in banking, which is towards online and mobile.
However, Calum Ewing, Metro Bank head of property, says the format has proved a hit with its customers.
“Our drive-thrus are popular with a wide range of people, from parents with a car full of children to disabled customers and those who want to shelter from the bad weather,” he says.
“Customers are able to use the drive-thru to carry out full cashier services from the comfort of their cars, including paying in cash and cheques, as well as withdrawing funds from their account.”
An old idea
Drive-thru banking is not a new concept in the UK. Barclays opened the UK’s first drive-thru bank in Hatton Cross in 1998, although it closed within six months. HSBC, meanwhile, has previously announced plans to trial drive-thrus although as yet no sites have come to fruition.
Retail banks are not alone among non-food businesses in experimenting with drive-thru formats. Indeed, the concept is even gaining traction in the property world.
Earlier this year, an estate agency in Cornwall – MPH Legal & Estate Agents – opened on the site of a former petrol station, allowing people to drive up, take a property brochure and go. From dry cleaners to off-licences, other operators have also taken the opportunity to open drive-thrus, with varying degrees of success.
Where they have failed, non-traditional drive-thru occupiers have tended to fall down on at least one of the three main criteria for a successful drive-thru format: convenience, practicality and standardisation of service.
Rapleys associate Mark Frostick believes drive-thru dry cleaners provide a case in point. “I don’t think drive-thru dry cleaners ever really worked,” he says. “If you’ve got a big suit and you’ve got to hand it out of the car window and someone else has got to get it through the window it’s a bit of a faff. It’s just as easy to park up and go into the store.”
Where the fast-food chains have thrived is in offering an easy, efficient service that can be replicated at every drive-thru outlet. “You’ve got to know what you’re getting before you turn up, so if you turn up to a McDonald’s, whether it’s in Aberdeen or Penzance, and you order a Big Mac, you’ll get exactly the same product,” says Frostick.
Another barrier facing new entrants to the drive-thru market is the lack of availability of suitable sites. “There is a general lack of opportunity because a lot of the right locations have been densely developed,” says David Chittenden, head of automotive and roadside at Colliers.
Metro Bank’s two drive-thrus are attached to a full-service bank, so the company is on the lookout for sites that are able to facilitate both formats.
“As with all our sites, we look for areas with high footfall – or traffic in the case of our drive-thrus – retail parks being a good example,” says Ewing. “Most importantly, we always ensure that our stores are prominent and highly visible to our customers.”
Competition for sites
The issue Metro Bank is likely to face as it tries to expand is that this list of requirements could just as easily apply to any of the fast-food giants, the majority of which are also planning to grow their drive-thru portfolios. “KFC, McDonald’s and Burger King are desperately looking for these sites and are out there with lists as long as your arms,” notes Frostick.
High demand for suitable locations means such sites come at a premium. “People are paying good money for strong transient sites with good passing trade and accessibility,” says Frostick. “If you’re a Metro Bank potentially competing for that site you’ve got to ask yourself: how much money do we make out of that lane and do we need to be there?”
The cost of securing new sites may also prove a barrier for new entrants looking to pilot drive-thru concepts, given that the return on the initial investment cannot be guaranteed.
“You have to pay a lot of money for these sites and so you have to think about your exit strategy,” says Chittenden. “If you’re creating something that isn’t fit for purpose in five or 10 years’ time, then what’s the point?”
If the reality is that non-food drive-thru concepts are likely to remain niche, it could be that the greatest threat to the future hegemony of the big three drive-thru operators – McDonald’s, KFC and Burger King – will come from fellow food sector players.
Taco Bell opened its first UK drive-thru in Cleethorpes earlier this summer, while Krispy Kreme is known to be on the lookout for more sites after opening a Hotlight format store including a drive-thru in Hampton, Peterborough, in July.
hen there are coffee chains Costa and Starbucks, which are aggressively expanding into the automotive sector. Starbucks is targeting 200 drive-thru sites by the end of 2016, while Costa told Property Week in January that a trebling of its drive-thru network to more than 100 sites was a realistic medium-term aim.
“The coffee boys have come in and done exactly what they’ve done to the high street,” says Frostick. “They are competing with McDonald’s and KFC for sites.”
Chittenden says that for brands looking to grow their network of drive-thrus, there are still good sites out there, but the majority are in secondary rather than prime locations, meaning operators have to be a little more flexible in their requirements.
Frostick echoes the point and adds that drive-thru formats are still popular with developers of new roadside service areas or retail parks so long as they can secure the right operator.
“If you can put a KFC or a McDonald’s on the front of your car park and only lose half an acre in car parking spaces, it’s a much better return than having those extra car parking spaces,” he says.
However, the risk of putting an unproven concept into a new development is one many developers are not willing to take. This, coupled with the numerous barriers to entry, means agents like Frostick are “not getting flyers through from hundreds of people saying I want a drive-thru site”.
So banks, estate agents and other non-traditional drive-thru occupiers are unlikely to become a firm fixture on Britain’s road network. Fast-food chains are another matter, though. They could well face increased competition for sites as consumers drive demand for the next generation of drive-thrus.
Few property investment sectors have motored along at as rapid a rate of knots as automotive over the past few years.
Investor appetite for car dealership lots is booming, with the sector offering the enticing combination of long leases, strong covenants, inflation-linked rents and regular tenant investment to ensure buildings match the aspirations of the car manufacturing giants.
The average lot size has also increased significantly in recent years, according to new research from Knight Frank. Its Automotive Capital Markets 2016-17 report shows that whereas a decade ago the typical investment lot size was approximately £2m to £5m, today the £7m to £10m bracket is well populated and assets and portfolios in excess of £10m are becoming increasingly commonplace.
Rise in registrations
These larger assets are expected to become more common in the future as car brands demand larger facilities off the back of four years of rising new-car registrations.
But has the market still got plenty of fuel left in the tank or are there threats on the horizon that will slam the brakes on automotive investments?
Since the millennium, there has been significant consolidation in the car dealership sector and the trend continued in the last year, with more than £500m of corporate acquisition activity registered making it one of the busiest 12 months for a decade, says Adam Chapman, partner and national head of automotive at Knight Frank.
“Merger and acquisition [M&A] activity has been prolific, which is a huge sign of the health of the sector not purely from the investor perspective but also from the occupational perspective,” he says. “We’ve seen more companies doing business-to-business transactions in the past 10 years and we’ve seen huge amounts of consolidation, with the bigger groups getting bigger and buying in brands. That’s resulting in a significant windfall for a lot of investors.”
n addition to car dealership businesses snapping up rival operators, the market has been buoyed by the arrival of more UK funds – propcos set up to specifically target automotive investment stock and foreign investors drawn by the cheap pound.
Their arrival has coincided with the perception of automotive as an investment class shifting from something considered alternative to something seen as more mainstream, and this reappraisal hasn’t been adversely affected by the outcome of the EU referendum, according to Chapman, who says deals have still gone through post vote.
“We’ve seen other sectors where prices have been reduced or purchasers have tried to take advantage [of the vote], but in our sector values have held up extremely well and I can’t think of too many examples where prices have been chipped,” he says.
It comes back to the scarcity of stock and strong fundamentals, he adds. “We’re selling a portfolio at the moment and a party tried to come and make an adjustment to the price to reflect the uncertainty and we said that nothing has changed – the product is solid and it’s a great sector. Ultimately they agreed.”
The scarcity of stock remains a major challenge, but Chapman believes there is an opportunity for occupiers to take advantage of the pent-up investor demand for automotive property.
Data – leasehold vs freehold ownership
“The fact that nearly 80% of the automotive market is freehold sounds like an enormous amount to me and that clearly provides a finite amount of leasehold and therefore investment opportunities,” he explains. “As investment appetite continues to gather pace, I think the dealer groups will start to question whether it is financially sensible to hold those very impressive, bespoke, retail-led dealerships or whether their business is about selling cars. If it is then sale and leaseback in some form could release a huge amount of money for them to invest in other [dealership] groups.”
While the opportunity to do sale-and-leaseback deals might appeal to some occupiers, others may be put off by past experience of the funding mechanism, believes David Chittenden, head of automotive and roadside at Colliers International.
“The dealership groups can do these types of deal at the moment, but the problem is that when they do the deal with the original landlord it’s happy days, but when the existing landlord sells on to a third party the relationship can break down, so a lot are saying they don’t want to do sale and leaseback anymore,” he says.
A handful of new dealership developments are taking place at the moment, which would help to bring much-needed new stock to the market, Alisdair James, partner in the automotive and roadside team at Rapleys. However, finding appropriate sites can be difficult because dealers are looking for spaces that bear the same characteristics that appeal to the likes of care home operators and residential developers.
“Jaguar Land Rover wants the same dealer partner to represent both brands in the same territory and that’s created a bit of musical chairs,” says James. “But in some towns it’s increasingly difficult to find a four-acre site that can satisfy both brands in one location, so it becomes quite a challenge.”
Other prestige car manufacturers are also putting pressure on their dealers to ensure their premises are kept up to scratch. If they aren’t, the manufacturer may choose to relocate to another location. But many dealership groups, especially the smaller ones, can’t afford the high cost associated with building bespoke dealership property, notes Chittenden.
A model for the big boys
“I do a lot of work with the retailers and it’s tough out there,” he says. “We’re seeing a lot of smaller groups exiting who can’t afford to survive because it’s become a model for the big boys. It’s a good time for them to sell because money is cheap and the investment market is still strong for this product.”
The big question is how much longer the appetite for investment opportunities will continue. Over the next few years the automotive sector could experience a seismic shift. We are already seeing showrooms get bigger because the model ranges of manufacturers are rapidly expanding and at the same time, many experts expect that in the future there will be fewer dealerships around. That is partly due to the further consolidation and M&A activity expected among the larger dealer groups, but it is also down to the growing importance of the internet and the next generation of car purchasers.
Chittenden thinks that for millennials and the generations that come after that car ownership will become less important as the sharing economy and short-term
car hire businesses such as Zipcar gain a greater foothold.
The industry is responding to the changing demands of modern consumers head-on by establishing a greater presence in high-footfall locations such as shopping centres.
“These sites have become more prevalent over the last few years and I can see more and more manufacturers opening sites in shopping centres,” says Chittenden.
However, these locations aren’t without their problems, as Rapleys’ James points out. “If you want to offer test-drives it’s a lot harder to do from shopping centre sites,” he explain
So investors need to be aware of the changing dynamics in the automotive sector to ensure the investments they buy today are future-proofed for the duration of the lease.
That said, while the automotive sector faces a number of challenges, with new-car sales showing little sign of slowing, Chapman is bullish about the prospects of this burgeoning asset class.
“Pricing is robust, certainly for the absolute prime assets, and we’re seeing a real surge in investor demand, with this flight to quality that you see in uncertain times,” he explains. “The prime automotive dealerships, which are typically 20-year plus terms to solid covenants with fixed RPI-linked rents, are about as attractive an investment product as it gets.”
In short, there is little sign that the brakes will be applied on investment in the automotive sector any time soon.
The UK commercial property market has seen a significant drop in confidence and investor demand following the Brexit vote. That was the conclusion of the Royal Institution of Chartered Surveyors commercial property market survey carried out after the Referendum on 23 June.
It said both the investment and occupier sides of the market had been impacted and rent and capital value expectations were now in negative territory.
That’s the UK picture. But what does Brexit mean for dealer property values? For the past few years the market has been buoyant, particularly for large, in-demand roadside sites.
Alisdair James, a partner at Rapleys, believes it is too early to say how much dealership property will be hit.
“The first indicator will be consumer confidence and the car sales figures over the next few months and particularly the September plate-change.
“If the uncertainty caused by Brexit impacts on consumer confidence and car sales decline significantly then we can expect a knock-on effect in the property market and for site values. For the time being however it seems to be business as usual.
“Where dealer groups remain under pressure from their manufacturer partners to upgrade or relocate their facilities they are continuing with their plans as before. A softening in the market could even present new opportunities for cash-rich dealer groups, particularly if competition for prime sites from alternate uses declines.
“In the short term, we have not seen a drop-off in enquiry levels for dealership property, and Brexit’s shadow has not deterred a number of recent corporate transactions, which have completed since the referendum vote. Others completed pre-June 23, despite the uncertainty. We expect this activity to continue,” he said.
Paul Taylor, a senior director with Bilfinger GVAs also believes it is too close to call on the Brexit impact.
“Logic points towards there ultimately being an adverse knock-on effect arising as a consequence of the worsening economic conditions that are likely to prevail.
“If customers are more reticent to commit to new car purchases and particularly if list prices were to rise due in part to the exchange rate deterioration, then one could anticipate a slowdown in the market.
“In reality, this may have been anticipated in any event regardless of the outcome of the referendum given the last four years of sustained headline growth.”
He also pointed out that it is difficult to get valuation data on much dealer property.
“In reality, relatively little prime dealership property is traded on the open market. The bulk of manufacturer-compliant property is transferred as part of business transactions, and the associated valuations are rarely published or totally reliable,” he said.
We also asked some of the experts what impact Brexit has or will have on institutional investors and dealership property?
At the wider level UK property funds managing billions of property assets have marked down their value of the building they own by 5%. These were mostly carried out by funds that are open to retail investors who can demand their money back at short notice.
Martin Carey, head of Investment at Rapleys said: “Brexit has undoubtedly caused something of a shockwave. The motor trade sector is unlikely to see the full extent of the referendum result for some while yet.
“While the automotive manufacturing industry has been vocal in its concerns, the mood amongst dealership operators is slightly more nuanced and this is being reflected in an investment market which hasn’t lost its appetite.
“For prime assets we anticipate that the market will remain stable and we are seeing a degree of confidence in the sector with dealership investment opportunities coming to market with little movement on asking terms and anticipated realisation figures.”
Carey argued that funds were still in the market for dealership opportunities which have strong covenants with long term rental growth prospects.
“Dealerships which have long-term, index linked income streams are still at the top of the shopping list with early indications that for the right asset, transactions are at pre-Brexit levels,” he said.
“Dealership property is still seen as a relatively safe investment, with Brexit not yet, altering the market fundamentals for occupiers and consumers.
“Dealership networks are continuing to expand fueling a steady stream of investment opportunities coming to market. While the Brexit tremors will continue to cause uncertainty, the automotive property market might just be better placed than most to weather the storm.”
Taylor at Bilfinger GVA said it was early days. “Logically demand will be thinner, at least in the short term, as many of the recent buyers of prime real estate in the sector have been the retail funds.
“In theory, with fewer buyers for prime stock, values could cool, although there is an argument that the very best investments will hold their value or even improve marginally given demand in the wider market is predominantly for long dated secure income,” he said.
APC property market review
In June Automotive Property Consultancy (APC) identified just over 1.5 million square feet of motor retail property which was available on the market. Over 70% of this was in the Midlands and the North with the West Midlands alone providing a quarter of the total. But demand for property is lagging behind.
“Requirements, by comparison are well down on the levels seen over the past two years. Geographically, half the current requirements have been targeting Greater London or the South East, the area that only represents 12% of the vacancy,” said Bill Bexson, managing director of APC.
“Typically, the requirements are for between one and four acres of land with between 10,000 and 20,000 square feet of premises. Physical presence on main roads remains the primary conduit to market,” he said.
Bexson said there was demand for bigger and fewer outlets with extensive parking.
“This has created a more clearly segmented market than before, exacerbated by continuing market consolidation, establishing distinctive value brands. “This places those controlling the best properties at the apex of the opportunity curve to secure the best franchises and generate the best returns.”
The prospect of moving house is fairly daunting and the concerns and considerations concomitant with private property moves are presented in a magnified fashion when one is considering moving premises for commercial purposes: is it affordable, what is the right location to maximise custom, how best to use space when space is increasingly at a premium etc.? IMI Magazine’s ‘moving’ special seeks to answer these questions and provide you with a plan of action if you are considering a relocation.
Businesses looking to upgrade or relocate premises may, like Phil and Kirsty, be focused on ‘location, location, location’, but those who ignore other key factors when deciding upon a new site could end up with a property headache that even the dynamic duo can’t cure. Whilst a property may be suitable in physical terms there are many issues that a site inspection won’t necessarily reveal.
For example, planning consent may be required for building work but also for a change of use which, with traditional stock in short supply, is an obstacle many are having to traverse. Current legislation requires that changing a property into a car showroom or workshop will almost always need planning consent. ‑is will need a planning application and whilst a decision should be available within three months this can, in some cases, take longer. A relocation plan should always include an appraisal of whether planning consent is required at any stage and, if so, a timeline introduced which factors in delays and mitigates any potential risk to business.
The lie of the land
It has also been known for some businesses to take properties without taking a survey which, whilst less of an issue for a new property, can add a significant cost if repairs are required on older facilities. For example, if a roof needs replacing five years into occupation it is not just the cost to consider but the disruption to the business as well. Meanwhile, rights of way and title restrictions continue to be factors, but these can be navigated with the help of a good solicitor. Businesses should, though, also be prepared to look beyond the confines of a proposed new site and keep in mind issues and developments in the local area. A proprietor, for instance, may have just relocated to the perfect site, and invested heavily to fit out the unit, only for the site to be bypassed, or a nice quiet neighbouring unit turned into a waste centre.
Relocation can be taxing
Upgrading facilities is a significant investment and tax liabilities can impact on expansion plans.
However, George Osborne’s 2016 Budget did contain some good news for business owners on the tax front. A new stamp duty slice system provides smaller operators a cut in their tax bill, with 0% owed on the first £150,000 and 2% on the proportion between £150,000 and £250,000 (though the largest investors and developers are hit with an increase, around 90% overall have had the bills cut or kept the same). Business rates, too, were addressed by the Chancellor and, while the root-and-branch reform many operators are hoping for hasn’t materialised yet, the threshold for rates relief has doubled – giving permanent exemption to many. The business rates system must still be navigated with care, though, when considering new premises and values. Rates charges can be appealed, but the current rates are still payable until an appeal is successful, at which point a refund will be provided.
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Rapleys has advised Marshall Motor Holdings plc (MMH) regarding their acquisition of Ridgeway Garages for £106.9m.
The Rapleys team, led by partner Phil Blackford, provided strategic valuation and property advice to MMH, one of the UK’s leading automotive retail and leasing groups, as part of the due diligence process. Ridgeway is a multi-franchise dealer group operating across the affluent southern home counties of England, Wiltshire and Dorset, representing 12 brands via 30 franchised dealerships.
Described by the company as a ‘truly transformational’ transaction, the strategic acquisition means that MMH will move from 10th to the 7th largest motor dealer group in the UK. The deal was completed on 26 May.
Phil Blackford, partner and head of Rapleys automotive and roadside team, said:
“We are delighted to be asked to assist the MMH acquisition team in providing strategic valuation and property advice as part of the due diligence process. This proved to be an important part of the process, given that the aggregate property value accounted for approximately 50% of the acquisition price.”
Daksh Gupta, chief executive of Marshall Motor Holdings plc, added:
“We chose Rapleys to advise us on the transformational acquisition of Ridgeway due to their track record in the space. We needed confidentiality, expediency, expertise and professionalism, and Rapleys delivered. Thank you Phil Blackford and team Rapleys.”
As part of Rapleys’ continued investment in the development of employees we are pleased to announce the latest promotions:
“The promotions reflect their contributions to the business and are thoroughly deserved. I would like to thank them for all their hard work and support in the continuing growth and success of the practice.” Rapleys Senior partner, Robert Clarke.
Two main issues dominated the news headlines in 2015, one positive and one negative.
The first was the VW emissions scandal which first reared its head in September, the full effects of which are yet to be felt. It is likely that the impact of this in practical terms will not be felt for some time as the true cost to the company emerges. However, the first negative effects were realised in November as used car sales for VW brands fell by 20% whereas the overall used car market improved by 3.8%. Headlines continue to be negative with the US President of VW resigning earlier this month.
The second, was that the used car market and new car registrations reached a record breaking 2.63m, beating the previous record of 2.58m in 2003, after 43 months of consecutive growth. Many in the sector believe 2016 could see a new high for registrations and we believe this will positivity fuel demand for new sites and premises. However, a slowdown in the housing market is what many in the sector want as numerous requirements cannot be satisfied owing to higher alternative use values, particularly for residential.
There have been a few high profile business acquisitions in the last few months of 2015/start of 2016 which has consolidated the sector even further. Those of particular note are as follows:
It is common knowledge in the market that Jaguar Land Rover (JLR) is seeking to redefine their market areas at the same time as enhancing their retail network. This has led to many business and property transactions involving the two brands and we highlight a few below:
It certainly seems as if JLR are the major brand leading the quest for new and improved premises although many other, particularly premium, brands continue to dictate their requirements to dealers. We see no signs of this activity diminishing through 2016 as car sales figures continue to improve.
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2015 was a strong year in the Automotive and Roadside sectors and was generally characterised by more occupiers chasing fewer opportunities and trying to compete with residential demand and values. We see the strong residential market continue to frustrate expansion plans in 2016. Our predictions are set out below.
Roadside retail/trade counter
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