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Rental market is at its ‘most competitive ever’ reveals Rightmove

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The battle for rental homes is at its ‘most competitive ever’ as a lack of supply and huge demand sends monthly costs soaring. 

There has been a sharp rise in asking rents, reaching more than £2,100 a month in London alone, amid a critical shortage of available homes, Rightmove says.  

This is down a combination of factors, including high demand from people who didn’t move during the pandemic, along with tenants staying put for longer in a rental property.

Looking to rent in Scotland? This five-bed house in the West Lothian town of Linlithgow is available for £1,900 a month via Paul Rolfe lettings agents

Looking to rent in Scotland? This five-bed house in the West Lothian town of Linlithgow is available for £1,900 a month via Paul Rolfe lettings agents

The study of 1,300 landlords found that the most common length of a tenancy is now more than two years.

A total of 18 per cent of landlords said their average length of tenancy has increased in the past year. 

Only 5 per cent of landlords have seen the average tenancy length decrease.

At the same time, asking rents have also increased significantly.

Those outside of London are rising at the fastest rate ever recorded, now standing at £1,088 per calendar month, up 11 per cent on this time last year.

It is a similar story in the capital where rents are up more than 14 per cent to £2,195 a month, according to Rightmove.

For those looking to rent in Manchester, this three-bed end of terrace is available for £1,200 a month via Hills lettings agents

For those looking to rent in Manchester, this three-bed end of terrace is available for £1,200 a month via Hills lettings agents

Rightmove went on to describe the current rental market as the ‘most competitive ever’.

It found that there are more than triple the number of tenants enquiring as there are rental properties available.

It suggested that the shortage of available homes to rent was due to a combination of factors.

These included more tenants staying put in longer tenancies, coupled with high demand from people who didn’t move during the pandemic, or who moved in with friends and family temporarily.

Rising household bills 

Many landlords have recognised the challenges of rising household bills for tenants, with the majority – at 63 per cent – choosing not to put up rents in the past year.

However, a third of landlords have increased rents.

Some agents in bigger cities say tenants who were able to move into a property for much lower than the average rent for an area during the pandemic have seen rents rise back up to market value again now that demand has increased.

There’s a shortage of stock and strong demand pushing up rents at a time when occupiers are being challenged by higher living costs.

Jeremy Leaf – London estate agent 

Jeremy Leaf, a north London estate agent, said: ‘We have certainly noticed over the past few months that what was happening in the sales market is now being mirrored in lettings; a shortage of stock and strong demand is pushing up rents at a time when occupiers are being challenged by higher living costs.

‘Many tenants are coming off worst because they are often least equipped to cope with the recent sharp increases in living costs. 

‘They are trying to hedge their bets by securing longer-term rental agreements and protection against further rises in the cost of energy if possible.

‘On the other hand, many landlords are wise to the change but recognise the value of long-term tenants. 

‘The latter are increasingly requesting that energy costs are ring-fenced before agreeing to stay on for say, another year, resulting in some serious negotiations.’

For those looking to rent in London, this three-bed top floor flat is to rent for £2,799 a month via Dexters letting agents

For those looking to rent in London, this three-bed top floor flat is to rent for £2,799 a month via Dexters letting agents 

Analysis of features in more than 20,000 build to rent listings on Rightmove has revealed a significant increase in demand for rental properties with all bills included.

In the past year, enquiries from tenants have jumped by 36 per cent for this type of property, the biggest increase out of all available features.

Homes with balconies, communal gardens, properties allowing pets and those offering zero deposits all came equal second, with enquiries rising 22 per cent.

Tim Bannister, of Rightmove, said: ‘A shortage of rental homes and strong demand for the properties available has led to a greater number of tenants choosing to renew their leases and stay put, rather than re-enter a competitive rental market.

‘People who had been waiting to see what happened last year are now being faced with record rents and so are seeking out properties where they can have more certainty over their outgoings, with all bills included becoming increasingly sought after.

‘Landlords may have been tempted to put their rents up given the high demand from new tenants, but many understand the affordability challenges of rising rents and bills, as our study shows that the majority are charging their tenants the same as a year ago.

‘Many landlords build up a relationship with their tenants over a number of years, and they will want to keep a good tenant for longer if they can rather than cash in on a rent rise in the short term.’

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Verdion starts on logistics development in Nettetal (DE)

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Verdion has started the development of a new €30m logistics facility on the outskirts of Nettetal near the German-Dutch border and Rhine-Ruhr metropolitan region. The speculative project is part of the value-add strategy of the Verdion European Logistics Fund (VELF) 1, which invests in last-mile logistics and value-add assets in northern and central Europe.

 

On completion in Q2 2023, the new facility at Herrenpfad-Sud 40 will offer 21,560m² of Grade A logistics space in up to four units, with 18,575m² of warehousing with 20 loading bays as well as 950m² of office and mezzanine space.

 

Verdion is targeting a DGNB Gold sustainability certificate for the highly energy-efficient building, which will not be using fossil fuels as a primary energy source and provides charging points for electric vehicles and cycle parking for a carbon-neutral commute. Additionally, the roof and electrical infrastructure will be prepared for solar energy generation. The site itself is located in the established Herrenpfad Sud industrial estate in Nettetal between Monchengladbach and Venlo, directly on the German-Dutch border and within striking distance of Germany’s largest conurbation, the Rhine-Ruhr metropolitan region.

 

Florian Stobe, Head of Investment – Germany at Verdion, said: “Within the framework of Verdion’s sustainability strategy, we determined that rather than modernising and extending the existing building as originally planned, a full-scale redevelopment would better serve this market and meet the fund’s ESG standards. We are already seeing a great deal of interest in the new space, based on its strategic location and the strength of demand for last-mile distribution space for customers in the Rhine-Ruhr metropolitan region. With this strategy in Nettetal and other assets in the VELF 1 fund coming forward, we are creating value at the same time as providing new space in undersupplied markets.”

 

 

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LaSalle and Accumulata to develop Munich’s first hybrid timber office building (GB)

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LaSalle Investment Management, acting in collaboration with ACCUMULATA Real Estate Group, will develop Munich’s first hybrid timber office building. The building is being constructed on behalf of Encore+, LaSalle’s flagship pan-European fund. Situated on Elsenheimerstrasse in the city’s Westend district, the office building will have a floor area of approximately 16,000m². With dismantling of the existing building on site already underway and construction due to begin in the third quarter of this year, the project is scheduled for completion during the first quarter of 2024. Lettings are already being marketed in collaboration with CBRE, the lead estate agent.

 

Designed by the leading Munich-based architectural firm Oliv Architekten, the asset will provide flexible, multifunctional spaces including a ground-floor café/bistro and landscaped roof terrace, as well as various wellness amenities, including a yoga studio and a relaxation lounge. Tenants will also enjoy bicycle parking, electric charging points and a smart underground car parking facility. Furthermore, the building will provide customisable office units and creative collaboration spaces, ensuring the asset is well-positioned for the future.

 

In terms of its environmental credentials, the project meets the highest sustainability standards across all areas, including construction, materials and operations. Having already received a DGNB “Platinum” precertification, the asset will be constructed using concrete reclaimed from the existing building currently situated at this location. All materials used in construction will be documented in a material passport, showing where and how the various components were sourced and installed, ensuring they can be repurposed at the end of their service life. These measures are projected to reduce embodied carbon by up to 25%. Embodied carbon will be low at 366kg CO2e/m², significantly below the RICS Building Carbon Database (offices) average benchmark of 1291kg CO2e/m².

 

The use of timber in the building’s load-bearing structure will ensure that approximately 1,100 tonnes of carbon will remain stored in the building fabric, rather than emitted into the atmosphere. During the course of the asset’s lifespan, emissions associated with the building’s operation will be reduced by 65% in comparison to a typical office building through the integration of a photovoltaic system, efficient heating, cooling and ventilation systems and the use of a ground water heat pump. The building will also harvest and store rainwater, supplying irrigation systems for the benefit of surrounding green areas.

 

David Ironside, Fund Manager of Encore+ at LaSalle Investment Management, commented: “This is an industry-leading and best-in-class project. The first of its kind in Munich, its design in accordance with circular economy principles and resource-conserving operation will serve as a benchmark in sustainable real estate. Located in one of the most sought-after office submarkets in Munich, the property will be extremely well placed to meet the ever-evolving demands of future tenants around sustainability, quality, amenities and infrastructure while providing attractive long-term returns for our investors.”

 

Markus Diegelmann, Managing Partner at ACCUMULATA Real Estate Group, added: “The start of demolition marks an exciting first step in the development of what will be one of the most sustainable office projects in Munich. At ACCUMULATA, we aim to promote the concepts of urban mining and the circular economy within the construction sector and this project is firmly aligned with this objective. By utilising ultra-high-quality and recyclable materials, we are creating an office building that can meet occupiers’ shifting requirements, both in terms of flexible working environments and sustainability standards.”

 

Georg Illichmann, Managing Director at CBRE GmbH, said: “As the first hybrid timber office building to be constructed in Munich, the project achieves all the modern-day requirements tenants demand from office buildings: easy accessibility to public transport, sustainability credentials and working spaces that promote communication, creativity and innovation. The building’s use of timber, unique to the Munich office market, will not only support the building’s sustainability credentials but also the wellbeing of occupiers. At CBRE, we are proud to be leading on the marketing of this unique asset and be involved in ground-breaking project in the German real estate market as the lead estate agent.”

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Cain provides €99.7m for London office development (GB)

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Cain International has agreed an €99.7m (£86m) development loan with BauMont Real Estate Capital  and YardNine for the development of a 95,000ft² highly sustainable, best in class office-scheme at 100 Fetter Lane in central London known as ‘Edenica’. The asset was acquired by BauMont in January 2021 with development partner, YardNine. Located in City Mid-town, in close proximity to Farringdon, the development benefits from easy access to the newly opened Elizabeth Line via Farringdon, as well as City Thameslink and Chancery Lane stations, with a diverse range of cultural, leisure, retail and educational amenities nearby.

 

The asset received planning consent in September 2021 for the delivery of a new 12-storey development, with over 8,000ft² of roof gardens, a new pedestrian route and garden square at ground level, alongside more than 230 cycle spaces. In addition to the light filled workspace the scheme will include a new café and F&B uses.

 

The building, situated at 100 Fetter Lane, has been named ‘Edenica’, a reference to the extensive outdoor spaces which form part of the scheme and adjoin it. The project is targeting the highest environmental standards of BREEAM Outstanding, WiredScore, SmartScore and WELL certifications.  Sustainability, technology and wellbeing are extensively incorporated into the design. This includes voluminous office space with clear heights of over 3 metres, openable windows to enable mixed-mode ventilation, extensive planted terraces to encourage biodiversity and provide significant external breakout spaces, facilities to encourage active modes of travel, and high-performance 100% electric building designed with the Waterman Group to ensure the building uses as little energy as possible and achieves Net Zero carbon emissions in use. Construction work has commenced on site and the scheme is due for completion in Summer 2024. 

 

Tanja Yerolemou-Ennsgraber, Senior Vice President – Real Estate Finance at Cain International, said: “We are excited to partner with an experienced sponsor and developer duo, joining their journey to deliver a best-in class office scheme. The project embraces the needs and desires of the future occupier, being mindful about their experience and bringing it to the fore. BauMont and YardNine have successfully unlocked a fantastic development opportunity and we are pleased to bring our construction financing expertise to the table and see Edenica unfold.” 

 

Damien Pasini, Director at BauMont Real Estate Capital said: “Following the recepit of planning permission last year, securing development financing is another significant milestone for 100 Fetter Lane. We look forward to working with Cain and YardNine to deliver a highly sustainable and innovative workplace in one of Central London’s most vibrant submarkets.”

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