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figures revealed by Jones Lang LaSalle
Nottingham, 27 February 2013 – As office take-up figures for the past 12 months showed proposed conversion to student accomodation outstripped all other uses during the same period, one of the leaders in this field locally, Jones Lang LaSalle, believes the sector still offers room for growth.
During 2012, 275,000 sq ft of legal exchanges / completions occurred for offices to be converted into student accommodation, whilst during the same period, offices acquired for business space totalled 240,000 sq. ft., highlighting the dominance of developer demand within the city.
The reason for this trend is two fold. Firstly, the office rents and capital values wiithin Nottingham are low against high student rents, therefore the viability of conversion to student accommodation is more commercial than refurbishment for continued existing use. Further, student housing is outperforming other commercial real estate sectors within the UK, delivering total returns of between 11-15%. Unlike the commercial market there is a realtively stable income and stronger potential for rental growth with higher occupance rates. Due to the less cyclical nature of further / higher education the performance of student assets is more resilient to downturn in performance.
Matthew Robertson, associate director at the Nottingham offices of Jones Lang LaSalle reports that Nottingham is being highlighted across the UK as a target location for regional and national student developers and operators. Demand is focused on Nottingham as there are two strong universities and the capital value of office space is relatively low.
To date, Jones Lang LaSalle has successfully exchanged, completed or put under offer buildings which will deliver around 550 student beds within the city and already there are a series of buildings at various stages of the development pipeline which are being converted by national investors, developers and operators. Recent activity includes exchanging on 55,000 sq. ft. at Minerva House, situated on Spaniel Row, with a proposal for the redundant offce building to deliver 151 student bedrooms. Similarly, 30,000 sq. ft. at Victoria House and 45,000 sq. ft. at Lawrence House were two buildings which were no longer viable for refurbishment for continued office use, and Jones Lang LaSalle identified student developers for their conversion.
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