Private & Confidential www.cushmanwakefield.com Parc Nantgarw: Commercial Property Market Review PREPARED ON BEHALF EURO GARAGES LIMITED 28th July 2016 Marchmount House Dumfries Place 1 |Parc Nantgarw Market Review Cardiff CF10 3RJ Contents 1. Introduction 3 2. Site Location 3 3. The Market Context: Supply of Existing Accommodation 4 4. The Market Context: Demand for Existing Accommodation 9 5. Summary and Conclusions 11 6. Appendices 12 2 |Parc Nantgarw Market Review 1. Introduction The following report provides our comments in respect of the South Wales commercial property market, considering both the supply of and demand for industrial (including manufacturing and warehousing) and office space in this geographic, with a particular focus on the subject site - a mixed use development site of 3.54 acres gross (of which only 2.26 acres are net developable) at Nantgarw, South Wales (“the Property”), as shown on the attached Site Plan (Appendices - Figures 1 and 2). Cushman and Wakefield (formerly DTZ) have been established in South Wales since 1970; we regularly advise occupiers, landowners and developers across the full spectrum of commercial property markets within the south and mid-Wales areas. The report structure initially considers the market context, examining the supply of existing industrial and office accommodation and employment land in the Rhondda Cynon Taff borough before linking this to the wider South Wales perspective. This is then followed by a review of the demand for industrial (including employment land) and office space in the vicinity of the Property before deriving the key conclusions from such findings. 2. Site Location The Property has a high profile location, situated adjacent to the A470 dual carriageway, approximately 4 miles to the north of Junction 32 of the M4 motorway and some 8 miles to the north of Cardiff city centre. Parc Nantgarw has been developed over the last 15 years and links directly into the Treforest Industrial Estate, which is one of the largest industrial estates within the South Wales region. Parc Nantgarw accommodates a variety of business, commercial and leisure occupiers including modern B1 offices, the main warehouse facility for Peacocks, a Makro Cash & Carry warehouse, together with a leisure complex including a multi-screen cinema, ten pin bowling, McDonalds, KFC, Frankie & Benny’s and Nando’s restaurants. Coleg Morgannwg have also recently completed a £35 million modern campus immediately to the north of the subject site. 3 |Parc Nantgarw Market Review 3. The Market Context: Supply of Existing Accommodation Industrial (B1/B2/B8 Accommodation) Considering firstly the supply of existing industrial stock within the county borough of Rhondda Cynon Taff (RCT), there is a substantial amount of available accommodation - totalling in excess of approximately 1.34 million sq ft, when cross- checking the Council’s current property register with latest commercial property agent and Welsh Government listings. These include units at: Llantrisant Business Park, Llantrisant, RCT (286,404 sq ft) Coed Cae Lane Industrial Estate, Pontyclun, Llantrisant, RCT (Coedcae Lane Industrial Estate, Green Park, Hepworth Park) (397,120 sq ft) Taff Business Centre, Treforest, Pontypridd, RCT (6,624 sq ft) Highfields Industrial Estate, Ferndale, Rhondda, RCT (9,489 sq ft) Treforest Industrial Estate, Treforest, RCT (26,198 sq ft) Ynyswen Industrial Estate, Rhondda Fawr Valley, Treorchy, RCT (32,100 sq ft) L’Oréal Facility, Llantrisant, RCT (199,965 sq ft) Aberaman Industrial Estate, Aberdare, RCT (12,031 sq ft) Gelli Industrial Estate, Pentre, RCT (8,508 sq ft) Hirwaun Industrial Estate, Hirwaun, RCT (110,927 sq ft) Aberaman Park Industrial Estate, Cynon Valley, Aberdare, RCT (5,090 sq ft) Ynyshir Industrial Estate, Llanwonno Road, Porth, RCT (25,082 sq ft) Former Remploy Premises, Cymmer Road, Porth, Rhondda, RCT (54,500 sq ft) Treorchy Industrial Estate, Treorchy, RCT (5,075 sq ft) Pontcynon Industrial Estate, Mountain Ash, RCT (2,385 sq ft) Ely Industrial Estate, Tonypandy, RCT (4,279 sq ft) Speciality Chemicals Manufacturing Facility, Church Village, RCT (91,435 sq ft) Parc Eirin, Tonyrefail, Porth, RCT (52,745 sq ft) Gellihirion Industrial Estate Pontypridd, RCT (10,600 sq ft) Surrounding Boroughs In addition to the above, there is a significant amount of existing vacant industrial and office accommodation immediately available on the periphery of RCT. Availability of accommodation in the surrounding boroughs is of significance given that locations such as Bridgend, Merthyr Tydfil, Caerphilly and Cardiff enjoy excellent communications with RCT and represent viable alternatives to the county borough for both smaller indigenous businesses and larger inward investment companies seeking premises in South Wales. The amount of surplus industrial and office accommodation remaining available in these adjoining boroughs has resulted in more competitive terms being offered and manifested in reduced values, which in turn has impacted on viability for speculatively built accommodation. As such, it is important when reviewing market availability (particularly when considering that many of these surrounding sites will compete directly with those locations listed in RCT), not to consider RCT in isolation. 4 |Parc Nantgarw Market Review Office (B1 Accommodation) The South Wales out of town office market is the sector which has suffered the most in the recessionary years since 2007. Levels of occupier demand have remained low for several years and the take up of space on many of the well- established business parks in South Wales has been poor. The average take up of office accommodation in South Wales over the last 10 years equates to 460,000 sq ft per annum. However, the majority of these transactions have occurred in Cardiff city centre as opposed to the out of town business parks (on the fringes of Cardiff). Actual take up of office accommodation in out of town locations between 2010 and 2014 has averaged only 120,000 sq ft per annum. There is currently an abundant supply of existing new and refurbished second-hand office accommodation available for sale and to let in well established and well located out of town business parks in and around Cardiff, Treforest and the M4 corridor. Examples of vacant space are set out below to illustrate this point: Treforest Industrial Estate, Treforest, RCT (29,455 sq ft) Gelliwastad Road, Pontypridd, RCT (4,028 sq ft) Indycube Treharris: Fir Trees, Fir Tree Centre, Fir Tree Drive, Quakers Yard, Treharris, Rhondda Cynon Taff (500 sq ft) Innovation House, Bridgend Road, Bryncae, Llanharan, Bridgend, RCT (31,141 sq ft) Charnwood Court, Parc Nantgarw, Treforest, RCT (5,000 sq ft) Afon House, Aber Rhondda Road, Porth, RCT (7,009 sq ft) Old Bank Chambers, Market Street, Pontypridd, RCT (3,264 sq ft) Indycube Upper Boat, Melin Corrwg, Cardiff Road, Upper Boat, Pontypridd, RCT (500 sq ft) Indycube Porth: The Factory, Welsh Hill Works, Porth, RCT (500 sq ft) Upper Boat Business Centre, Upper Boat, Treforest, RCT (2,509 sq ft) Cardiff Street, Aberdare, RCT (1,165 sq ft) Thistle House, Llwynypia Road, Tonypandy, RCT (5,627 sq ft) Dinas Isaf Industrial Estate, Williamstown, Tonypandy, RCT (25,317 sq ft) Magden Park, Llantrisant, RCT (14,930 sq ft) Ty Nant Court, Morganstown, Cardiff, RCT (1,357 sq ft) Penuel Lane, Pontypridd, RCT (1,673 sq ft) Hirwaun Industrial Estate, Hirwaun, RCT (7,490 sq ft) Corporation Buildings, Depot Road, Aberdare, RCT (1,476 sq ft) Abernant Road, Aberdare, RCT (2,205 sq ft) Ty Cynon, Navigation Park, Abercynon, RCT (4,806 sq ft) Crown Buildings, Greenbach Street, Aberdare, RCT (5,877 sq ft) Parc Nantgarw, Treforest, RCT (35,000 sq ft) The above represents circa 190,000 sq ft of vacant office space, all of which are located on established and recognised office locations comparable with Nantgarw. Those office properties listed are all of a reasonably modern quality, and with landlords being prepared to be flexible and competitive in their disposal terms in order to secure lettings and sales. 5 |Parc Nantgarw Market Review Employment Land Supply Aside from existing vacant accommodation, there is an abundance of allocated (both strategic and local) development sites available in RCT which are suitable for B1/B2/B8 uses (a sample of which is included below in Table 1, demonstrating alone some 172 hectares) to support the plentiful provision of employment land supply in the borough moving forward. Table 1: Employment Allocated Sites in Rhondda Cynon Taff (sample) Location Size Comments (ha) Stelco Hardy, 2.13 Situated on the edge of the residential area of Tynewydd Treherbert The site is vacant B2 is the existing, proposed or last known use class Land sits in private ownership Cae Mawr Industrial 3.60 2.03ha undeveloped Estate, Treorchy Located on the edge of Treorchy Shared site access with Lidl and adjacent Treorchy Industrial Estate B2 existing, proposed or last known use class Land sits in private ownership Site G6, Main Avenue, 3.15 The land is available in plots from 2.25 acres with access off Main Treforest Industrial Avenue, the main thoroughfare through the estate. Estate, Treforest B1,B2 and B8 use classes Site E5, Main Avenue 1.30 Development site adjoining Treforest Industrial Estate railway Treforest Industrial station with direct access onto Main Avenue Estate B1,B2 and B8 use classes Treforest Former Chubb 8.38 Site comprises brownfield land Factory, Ferndale B1, B2 & B8 existing, proposed