Airport & Ports Property Market 2007
Contents AIRPORTS Executive summary
1
UK Overview
6
The UK context
6
UK off-airport markets
7
Industrial/warehouse markets
7
UK passenger airports
8
UK freight airports
9
European Property Markets
12
European off-airport industrial property
12
European off-airport office property
11
European AIrports
14
European passenger airports
15
European freight airports Issues Competition between London and Europe’s largest airports Security
17 20 20 21
PORTS Executive summary
1
Introduction
28
Drivers of the shipping market in Europe
29
Trans-European networks: motorways of the sea
31
Investment market for distribution warehousing
32
Major shipping lines
33
Major ports in Europe
34
Port profiles
37
UK ports
39
King Sturge: Airport & Ports Property Market 2007
Airports Executive Summary
Ports Executive summary
Worldwide air passenger traffic increased by 6.5% and cargo tonnage was up by 3% in 2005, according to ACI. Despite this growth, the figures demonstrate a noticeable slowdown, in line with the global economic situation.
Containerisation of seaborne freight has allowed goods to be cheaply imported into Western Europe, the United States and Australia from manufacturing centres such as China and Japan. Massive increases in containerisation over the last two decades, have fed the trade flows across the world.
The global economic scenario for 2006/07 is expected to be less favourable for air travel and this, combined with more stringent security requirements, is likely to lead to slower passenger and air freight growth.
For the foreseeable future this growth in seaborne containerised freight is likely to continue. Within Europe, pressure on air, road and rail infrastructure keeps coastal and river shipping a vital and attractive option for freight movement.
The fastest growing airports in Europe are mostly in Central and Eastern Europe.
Container Freight Growth: Top 20 Ports in Europe – Five year growth
Year to June 2006 Airport 1
Istanbul - Sabiha Gökçen
SAW
Latest annual growth
5Yr
19.7%
51.9%
No of passengers
% change
1,205,805
Est. 300.0+
2
Romania
Constantza
98.8%
45.3%
3
Russia
Kaliningrad
55.2%
39.5%
2
Moscow - Vnukovo
VKO
2,130,725
50.8
3
Trabzon
TZX
666,355
50.6
1
Country
Port
Russia
Novorossijsk
4
Lithuania
Klaipeda
23.0%
33.2%
5
Italy
Taranto
-6.1%
30.9% 30.7%
4
Krakow – John Paul KRK II Intl
987,475
47.6
6
Ukraine
Odessa
43.2%
5
Riga
RIX
1,132,150
39.6
7
Ukraine
Ilyichevsk
48.0%
30.1%
6
Pisa
PSA
1,413,698
39.1
8
Turkey
Ambarli
10.0%
28.4%
7
Adana
ADA
1,030,021
31.6
9
Poland
Gdansk
60.1%
23.4%
31.1
10
Germany
Lübeck
23.9%
18.7%
Russia
St.Petersburg
44.1%
18.4%
8
Basel/Mulhouse
BSL
1,842,354
9
Katowice
KTW
590,815
28.7
11
10
Murcia – San Javier MJV
755,166
27.8
12
Germany
Cuxhaven
36.4%
14.6%
13
Turkey
Mersin
12.0%
14.3%
14
Slovenia
Koper
17.2%
14.0%
Source: ACI
London Heathrow remain the most expensive airport related office market in Europe, followed by Paris Charles De Gaulle. The European airports that have experienced the most noteworthy change in terms of passenger growth during 2005 & 2006 are: Istanbul - Sabiha Gökçen, Krakow – John Paul II International and Santander
15
Finland
Kotka
18.7%
14.0%
16
Poland
Gdynia
6.1%
13.0%
17
Poland
Szczecin
31.7%
12.8%
18
Germany
Hamburg
15.5%
11.5%
12.7%
10.8%
7.9%
10.6%
19
Latvia
Riga
20
Finland
Hamina
Source: Port of Hamburg 2006
In Western Europe ports have been under pressure to take larger ships and more containerised freight throughput in the last few years as economic growth in Central and Eastern Europe, and associated increases in consumer spending, created strong demand for imported goods.
In the UK, the following airports have all demonstrated growth in passenger numbers of above 20%pa: Bournemouth, Coventry, Exeter, Liverpool John Lennon and Southampton
King Sturge: Airport & Ports Property Market 2007
It is undoubtedly the case that the influence of low-cost carriers (LCCs), such as EasyJet and Ryan Air, has been enormous on these growth figures; the expansion of the LCC network has been fuelled by the seemingly insatiable demand for cheap flights to holiday destinations.
The weak euro has also contributed to the growth of port-based activity as exports from all across Europe have increased. These factors have created a surge in occupier demand for port-related warehousing facilities, and also for distribution space along the routes from ports to consumer markets in major population centres.
% change y-o-y 0.0
4
Amsterdam AMS 44,163,098 3.8
€180 m² -10.0
5
Madrid
MAD 41,940,059 8.4
€218 m²
3.3
6
London Gatwick
LGW 32,784,330 4.2
€316 m²
0.0
7
Rome
FCO 28,619,845 2.0
€250 m²
0.0
8
Munich
MUC 28,619,427 6.7
€174 m²
20.8
9
Barcelona
BCN 27,121,753 10.5 €150 m²
0.0
10
Paris Orly
ORY 24,860,532 3.4
3.4
€400 m²
Prime rents for warehousing at ports across Europe 140 120 100 80 60 40
Source: ACI & King Sturge. Rents for out-of-town office space as at Q2 2006.
20 Southampton
0
Further influence of LCCs is seen in the manner in which airport facilities are being designed to accommodate the needs of business which seek to drive down costs at every opportunity. This has been seen at Marseille-Provence, for example, with the development of the mp2 terminal facility. We consider that the future development of terminal buildings designed to accommodate LCCs is likely to follow this sort of example.
Antwerp
€144 m²
FRA 52,219,412 2.2
Bordeaux
Frankfurt Am Main
Lille
3
Marseille
3.4
Hamburg
€400 m²
Rotterdam
Paris Charles De CDG 53,798,308 5.0 Gaulle
Athens
2
Amsterdam
10.8
Felixtowe
€429 m²
Copenhagen
LHR 67,915,403 0.8
Barcelona
London Heathrow
Hull/Immingham
1
Although over the last 5 years, the fastest growth has been in Russia and Romania (where market rents are sometimes opaque and below the rent for ports like Bordeaux and Antwerp), the most expensive warehouse location in Europe has been Southampton, UK, followed by Barcelona, Spain.
e m2 p.a.
Prime office rent (p.a.)
% change y-o-y
No of passengers
Airport
Largest European passenger airports 2005
Source: King Sturge mid-2006
The increase in freight into Europe on all modes of transport over the last 10 years has been a major environmental concern in Europe, and the European Commission has taken action to control the number of trucks on the road and increase the amount of freight transported through other modes such as rail and water.
The European airports that have experienced the most noteworthy change in terms of freight growth during 2005 - 6 are: Vatry-Chalons-enChampagne, Riga, Frankfurt Hahn, Zagreb and Birmingham International.
Due to the rapid increase in containerised shipping, averaging about 11% growth annually for the past decade, ports have become extremely attractive business propositions. Mature ports provide a steady income stream, while ports in the emerging markets of China and Eastern
The downward global trend in passenger number growth at large airports (i.e. those
handling over 500,000 passengers per annum) was mirrored in continental Europe, the growth in 2005 - 6 being 1% lower (at 5.9%) than 2004. It was noticeable, however, that airports handling over 10,000 tonnes of freight per annum saw larger increases.
Europe have strong potential for growth. Currently the largest ports around Western Europe are Rotterdam, Antwerp and Hamburg, and Hamburg is also one of the fastest growing ports, handling increasing freight volumes driven mainly by demand for consumer goods from Central and Eastern Europe.
Year to June 2006 Total cargo (tonnes)
Airport
% change
1
Porto
OPO
17 322
39.3
2
Liège
LGG
195 033
27.7
3
Frankfurt Hahn
HHN
127 819
25.7
4
Vienna
VIE
98 550
19.5
5
Vatry-Chalons-enChampagne
XCR
19 069
18.6
6
Venice
VCE
13 065
16.4
7
Bologna – G Marconi
BLQ
11 275
14.8
8
Stuttgart
STR
14 182
13.8
9
Budapest
BUD
29 770
12.9
10a
Malmö
MMX
19 764
11.4
10b
Shannon
SNN
16 165
11.4
However, over the last five years several ports such as Ambarli, Izmir and the Black Sea ports of Novorossijsk and Constantza have also seen outstanding growth and are emerging as hotspots for freight and distribution. • World trade is growing at around 7.5% a year, supporting growth in container freight of 11% a year. • Western European container ports are experiencing rapid growth in freight throughput - 15% in Hamburg, 12% in Rotterdam and 7% in Antwerp last year.
London, by a long way, remains the most expensive warehouse airport location in Europe, followed by Luxembourg and Copenhagen.
• Container freight growth in Europe has also been driven in part by consumer spending growth in EU accession countries
% change y-o-y
% change y-o-y Prime warehouse rent (p.a.)
Total cargo (tonnes)
Airport
Largest European freight airports 2005
1
Paris
CDG 2,010,361 7.2
€54.00 m²
1.9
2
Frankfurt
FRA 1,962,927 6.7
€72.00 m²
0.0
3
Amsterdam AMS 1,495,919 2.0
4
London
5
Luxembourg LUX 742,766
€70.00 m² -17.6
LHR 1,389,589 -1.6 €236.80 m² 4.2
0.0 -6.3
6
Brussels
BRU 660,854
5.2
€45.00 m²
Cologne
CGN 643,605
4.6
€55.00 m²
0.0
8
Milan
MXP 384,753
6.5
€65.00 m²
3.2
9
Madrid
MAD 365,442
-3.4 €70.50 m²
5.2
5.8
• Yields for warehousing have decreased by up to 200 basis points over the last two years.
4.8
€82.00 m²
7
10 Copenhagen CPH 355,087
• Increasing container freight across Europe has added to the attractiveness of distribution warehousing around “gateway” cities in Europe.
• Ports themselves have become an attractive investment opportunity offering secure income and increasing capital value.
€73.73 m² -15.4
Source: ACI and King Sturge. Rents for large industrial space in that city as at mid 2006.
In the investment markets, the sheer weight of money chasing product has mean that yields have compressed significantly creating capital growth. Prime yields of 5.8% are typical for office properties around Europe’s airports, and industrial
King Sturge: Airport & Ports Property Market 2007
properties generate yields averaging around 6-6.5% in these locations. Of course, there are wide variations hidden within these average figures. In Western Europe the market improved for prime property around airport locations, as it did for non-airport, out-of-town properties. In Central Europe, largely due to the increasing supply of property in town and city centres, capital values did not increase to the same extent. Airports and issues to watch • There is an increasing amount of interest from regional and local authorities and from some airport operators in the concept of the “Aeropolis”. Schipol Airport in The Netherlands is a good example of this and it will be interesting to see how its continuing development enables it to compete with London Heathrow, Europe’s largest airport. • There is no doubt that climate change policy and regulation will have an increasing impact on aviation activity. All governments and the European Commission are acknowledging the adverse role that aviation has upon global warming. Moves by the Commission to include the aviation sector within the EU Emissions Trading Scheme may go a long way to curbing the calls from many quarters to levy carbon taxes on the sector. • The increasing demand for tighter security in and around all major transport interchanges, particularly at airports, is likely to have a number of effects both on aviation and airports. It will be interesting to watch whether security concerns reduce demand for air transport significantly or whether airport operators increase their demand for space to accommodate more staff, equipment and much larger holding areas for passengers.
King Sturge: Airport & Ports Property Market 2007
UK Overview – Airports
transport (passengers), in addition to the volatility experienced at times of war and political unrest. Based on the apparent correlation, one might have expected passenger demand to be higher in 2006 than our estimate indicates, as economic growth is forecast to be significantly greater than in 2005. However, factors such as the surge in oil prices and perhaps a lagged effect of 7 July 2005 London terrorist attacks may have contributed to the slight reduction in the passenger demand growth rate.
The UK context Demand from passengers remained healthy during 2005, with annual growth in passenger volumes of 5.8%, and is virtually identical to the 10-year average of 5.9%. Although this still signifies a fall in the growth rate compared to 2004, when it reached 7.9%, it is in line with UK economic growth. The overall UK economy slowed in 2005 and expanded at 1.8% per annum, down from 3.3% the previous year.
UK airports handled almost 230 million passengers in 2005. In recent years, the growth of UK airport traffic has been driven by demand for European services, and in 2005 the volume of passengers on European flights increased by 6%, while on domestic flights it increased by just 3%. However, the recovery in global travel has continued through 2005 and the volume of passengers on long-haul flights increased by 8%. The low-cost airlines have sought to meet demand by opening up new routes, not just to European destinations but to Marrakech, Morocco, as well. The chart below demonstrates how demand for low-cost air travel may be starting to moderate as more people embark on transatlantic and other travel not covered by the low-cost airlines.
At the end of Q3 2006, the UK economy was continuing to grow, with preliminary GDP estimates indicating expansion of 2.8% on an annual basis. The main driver of growth this year has continued to be the service sector, which grew at 0.8% in Q3 alone. Within services, the distribution, hotels and restaurants sector was particularly strong and this was attributed to accelerating activity among retailers and public houses due to the World Cup effect in the summer. In addition, manufacturing output built up pace, growing by 1.5% on Q3 2005. The latest economic forecasts show overall GDP is predicted to be circa 2.8-3.0% in 2006, while the 2006 passenger volumes growth rate is estimated at around 4% based on provisional growth data from January to August this year.
Low-cost airline passenger volumes, 1999-2005 (000s) 80,000
UK economic growth and passenger demand America bombed Libya
Passenger % pa
15
Falklands War
Gulf War and Recession
War in Iraq SARS
10
9/11
5
70,000 6 5 4 3 2 1
0
passengers (000s)
7/7 London terrorist attacks
GDP % pa
20
40,000 30,000 20,000
0
-1 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
-10
50,000
10,000
0 -5
60,000
-2
1999
2000
2001
2002
Ryanair
2003
2004
2005
2006
easyJet
Source: Ryanair and easyJet Passenger growth
GDP
As predicted in last year’s King Sturge Airport Property Market Report, the UK air-freight market a key driver of demand for industrial and warehouse property around major UK airports - saw demand reduce during 2005. The annual growth rate of UK air cargo handled fell from around 7-8% at the end of 2004 to zero at the close of last year. This was in
Source: CAA, Experian Business Strategies Note: 2006 figures are estimated
It is not just recently that passenger volumes and UK economic growth have followed similar growth trends. The chart below shows the correlation between UK economic output and demand for air
line with the slowdown of the UK economy, and the rate is expected to see a return to positive growth in 2006 as UK economic output has already seen trend growth at the half-way point this year.
8% to 6.25% and 7.75% to 6.5% respectively. It will be interesting to watch future investment performance near Newcastle Airport in particular as vacant adjacent land becomes developed.
UK off-airport markets
Other strong markets in terms of prime yield shift have been around Dublin, Edinburgh, Liverpool John Lennon, Manchester and Southampton airports.
The following analysis looks at hypothetical rents and yields achievable in the off-airport market on prime out-of-town office or industrial/warehouse space.
Industrial/warehouse markets Given that freight for all UK airports fell by 0.3% in 2005, it has perhaps been surprising to see prime rents in these areas generally performing well over the last 12 months. A survey of the main UK airports suggests that in 2005 an average rise for prime hypothetical rents across the country of approximately 3-4% occurred. Within this context, key performing markets have been near Leeds Bradford (27%), Cardiff (14%), Heathrow (10%) and Aberdeen (9%) airports. The recent performance at Leeds-Bradford is likely to continue, given the infrastructural improvements which are due to take place at the airport, including those to the terminal, runways and road links to and from the airport.
There has been a varied picture in terms of commercial and industrial occupier activity in offairport location across the UK in the past year. In general terms, the past year has been one demonstrating rental growth in commercial offices property. Our survey of commercial property prime rents for off-airport markets suggests that rental growth has been in of the order of 4-5% in the period. Of course, this average figure hides a range of different rental increases. The “star performers”, ie those which have returned rental growth figure at 10% pa or higher have been Bristol (21%), Dublin (13%), Heathrow 15% and Prestwick (10%). Other airports that have performed relatively well include Cardiff (9%), Exeter (8%), Durham Tees Valley (6.5%) and Glasgow and Leeds Bradford (6% respectively). This performance in offairport property rental growth has mirrored growth in regional centres and comes about, in part at least, because of a lack of suitable stock available. Rental value growth performance around the top performer, Bristol, is in the context of a market which has less than two years of supply, a minority of which is new. It will therefore be interesting to see how rental value performance, and freehold interest, in space here changes in future.
In terms of the freehold market, there has been a mirroring of the general UK picture of investment yields around airport industrial markets over the last 12 months. Again in terms of hypothetical prime investment yields, the survey evidence suggests that key market moves in terms of yield compression have occurred at Liverpool and Glasgow. This is not to belittle prime yield compression which has occurred at other places such as Birmingham, Dublin, Edinburgh, Heathrow and Leeds-Bradford as well. The limited supply of industrial floorspace surrounding Liverpool John Lennon airport, coupled with forthcoming improvements to local transport networks, could bode well for the industrial property market nearby, although it must be noted that this market is relatively small.
In terms of the investment market, there has again been a variable picture emerging as far as prime investment yields are concerned. As with office property investment markets generally around the country, off-airport commercial property investment yields have fallen considerably over the last 12 months. Key market movers have included those near Newcastle and Durham Tees Valley airports, where prime yield shifts have been from around
The occupational market around the most expensive industrial location in the world, Heathrow Airport, has seen rent rise to approximately £160m² during 2006. The availability of stock in this location is something which may be of concern to potential occupiers in future. The interim Masterplan for the airport, issued mid-2005, considers how the development
King Sturge: Airport & Ports Property Market 2007
of a third runway at the airport may lead to growth in air traffic. The proximity of greenbelt land to the airport is something that the owners of the airport, regulators and property developers will have soon to address head-on if likely future demand is to be met.
numbers during 2005, taking the total number of people handled at the airport to almost 2 million. Another London airport, Gatwick, also experienced a large increase in numbers handled with an extra 1.3 million terminal passengers. Top 10 largest passenger airports (2005) Airport Terminal % change passengers 2004 - 2005 Heathrow 67,683,317 0.9 Gatwick 32,693,005 4.1 Manchester 22,083,008 5.3 Stansted 21,991,733 5.2 Dublin* 18,349,742 6.4 Birmingham 9,311,403 5.9
UK passenger airports The analysis of the fastest growing UK airports covers airports that handled over 500,000 passengers or 1,000 tonnes of freight in 2005, based on data available from the Civil Aviation Authority. The growth of passenger volumes at UK airports continued during 2005. An overall increase of 5.8% was recorded for all reporting UK airports compared to 7.9% in 2004, according to Civil Aviation Authority (CAA) figures.
Luton Glasgow Edinburgh Bristol
718,845
21.5
8,775,355 8,448,604 5,199,220
2.6 5.7 13.0
Source: CAA, *Dublin Airport Authority
Five of the top 10 fastest growing airports were smaller (sub 1 million passengers) regional passenger airports including Bournemouth, Coventry, Exeter, Durham Tees Valley and Inverness.
Fastest growing UK passenger airports (2005, % pa) Bournemouth Coventry Exeter Liverpool Norwich Luton Southampton London City Durham Tees Valley Inverness Bristol Glasgow Prestwick Newcastle Leeds Bradford Belfast International
9,134,613
842,761
841,683 4,409,018 545,268 9,134,613
The strong performance of regional airports in 2005 is in line with the long-term trend, with CAA figures showing that terminal passenger volumes at regional airports have doubled from 47 million in 1995 to 95 million in 2005.
1,835,029 1,996,397 898,370 588,773 5,199,220 2,404,654 5,187,182 2,608,721 4,819,512
0
10
20
30
40
50
60
70
% pa Note: Only airports which handled over 500,000 passengers in 2005 are included in the analysis. Actual passenger numbers handled in 2005 are given alongside each bar.
All of the top 10 largest passenger airports saw increases in terminal passenger volumes. Luton Airport overtook Glasgow International to take seventh place in the top 10 airports, with Bristol displacing Newcastle for 10th place.
Source: CAA
Bournemouth Airport was the fastest growing UK airport in percentage terms during 2005, handling 68.2% more passengers. This figure representing an extra 336,226 passengers compared to the total for the previous year.
Following a large increase in passenger numbers during 2004, Heathrow stabilised in 2005 with a modest 0.9% change in terminal passengers handled. The airport, however, continues to claim the title of “world’s busiest international airport”.
The largest airport in the top 10 fastest growing was Luton, which was also the most rapidly expanding airport in the London area. Terminal passenger traffic rose by 21.5% to over 9.1 million passengers in 2005, an increase of 1.6 million on the 2004 total.
Cardiff Airport saw a fall of 5.8% in numbers of passengers handled during 2005. The withdrawal of services from low-cost operator Ryanair from the airport plus the cessation of AirWales’s operations are likely to further affect passenger volume growth in 2006.
London City Airport continued its recent trend for rapid growth, posting a 19.2% increase in passenger
Nottingham East Midlands Airport saw its first fall (4.4%) in passenger numbers in nine years, possibly as a result of intense competition from newly opened local rival Robin Hood Airport Doncaster Sheffield, which handled over 1 million passengers in its first 60 weeks of operation.
Top 10 largest freight airports (2005) Airport Freight handled (tonnes) 1,305,686
% change 2004 2005 -1.5
266,569 237,045 222,778 147,484
5.3 5.0 2.1 -1.1
Belfast International Edinburgh
37,878 29,596
17.8 8.1
Glasgow Prestwick Luton Birmingham
29,199 23,108 12,939
-14.4 -11.7 31.4
Heathrow Nottingham East Midlands Int’l Stansted Gatwick Manchester
UK freight airports Freight The total weight of freight carried from UK airports fell marginally in 2005. A -0.3% change in the level of freight carried for all UK airports to 2.36 million tonnes was recorded, down from 2.37 million tonnes the previous year.
Source: CAA
Fastest growing UK freight airports (2005, % pa) Coventry
In the North West of England, Manchester Airport also saw a small reduction (-1.1%) in freight carriage to 147,484 tonnes, down from 149,181 in 2004.
6,142
Birmingham
12,939
Belfast International
34,878
Aberdeen
4,089
Edinburgh
29,594
Glasgow International
8,733
Nottingham East Midlands
266,569
Stansted
The second and third most important cargo airports in terms of size, Nottingham East Midlands and Stansted, both saw annual growth in excess of 5% in 2005.
237,044
Bournemouth
5,718
Gatwick
222,778
0
10
20
30
40
50
60
70
80
90
100
% pa Note: Only airports which handled over 1,000 tonnes in 2005 are included in this analysis. Actual freight volumes handled in 2005 are given alongside each bar in tonnes.
Source: CAA
There was movement in the table of the UK’s top 10 largest freight-handling airports, with Belfast International and Edinburgh airports both leapfrogging Glasgow Prestwick, which fell from sixth to eighth place after experiencing a reduction in freight carried in 2005 of 14.4%.
Significant falls were seen at a number of airports including Heathrow (-1.5%); however, some important cargo-handling airports did see strong growth, including Nottingham East Midlands (5.3%), Stansted (5.0%) and Belfast International (17.8%).
As highlighted in last year’s report, the rapid growth at regional airports attributable to low-cost airlines does not tend to offer increased freight capacity, as the combination of short-haul routes and rapid turnaround times makes it uneconomical and unviable to transport freight on low-cost airline routes.
The fastest growing freight airport was Coventry, which recorded an increase of 86% in freight handled (2,843 tonnes), although this was from a low base figure for the previous year. Nearby Birmingham International Airport reported a surge in freight carriage with over 3,000 extra tonnes carried in 2005, an increase of over 31%, this following a disappointing performance in 2004.
This is again demonstrated in the context of the fastest growing freight airports, where in six out of the 10 airports over 95% of all cargo is carried in dedicated freighters.
As forecast in last year’s report, Heathrow, which is by far the UK’s largest freight airport, experienced a slight reduction in the volume of cargo handled. The annual total of 1.3 million tonnes was around 19,000 tonnes below the figure recorded for 2004, a fall of 1.5%.
The UK average for air freight carried is 64% in the bellyhold of passenger aircraft and 36% in dedicated freighters. However, it is apparent from the table
King Sturge: Airport & Ports Property Market 2007
Newquay • Located approximately 5 miles north-east of Newquay. • Recent extension of the terminal building has increased its size by 20% and should allow an annual passenger-handling capability of 400,000 passengers (from 250,000 currently). • Additional car parking, new security features and works to aircraft stands outside the terminal should also allow for growth of this relatively small, regional airport. • Cornwall County Council is undertaking an economic appraisal prior to preparation of a masterplan with a view to secure future planning consent and private-sector investment.
above that a major growth area for air freight is at airports handling a high proportion of freight in dedicated freighters. Top 10 fastest growing freight airports: freight carried (2005) Airport Freight (tonnes) % carried in Passenger Cargo dedicated aircraft aircraft freighters Coventry 6,142 100 Birmingham 11,694 1,245 9.6 Belfast 368 37,509 99 International Aberdeen 2,487 1,602 39.2 Edinburgh 485 29,110 98.4 Glasgow 7,967 766 8.8 Nottingham 204 266,365 99.9 Stansted 1,347 235,698 99.4 Bournemouth 290 5,429 94.9 Gatwick 169,000 53,779 24.1
Robin Hood Doncaster Sheffield • Located approximately 6 miles south-east of Doncaster. • Owned by Peel Holdings, also the owner of Liverpool John Lennon Airport, Durham Tees Valley Airport and Sheffield City Airport & Heliport • Regional and local planning policy recognises the importance of the airport to the local economy. Within Yorkshire & Humberside, this airport has the advantage of a long runway, second only to Manchester in the north of England, which can accommodate long-haul flights. • The airport currently aims to cater for 2.3 million passengers pa and 50,000 tonnes of freight. Its maiden scheduled flight was on 28 April 2005 and performance to date has been impressive.
Source: CAA
Therefore, demand for commercial property to serve the needs of freight operators will tend to be generated around airports that offer dedicated freight services. Strong growth forecast in the express parcel sector, which requires a round-the-clock operation so that next-day delivery requirements can be met, will make airports offering this type of service particularly attractive.
Some UK airports to watch Exeter • The sale of a 75% stake in the airport by Devon County Council is likely to be to the preferred bidder announced in October 2006, Regional & City Airports (RCA), a joint venture by Balfour Beatty and London City Airport • Passenger growth figures for 2004-05 place Exeter as the third fastest growing airport in the UK, at 37.1% • A masterplan for the airport is needed and will doubtless be forthcoming once the sale of the airport has been concluded
Newcastle International • Located 10 miles north-west of Newcastle. • The 10th largest airport in the UK, passenger growth predictions for this airport suggest that it could almost double its throughput over the next 10 years. • The airport’s masterplan, which has been in draft form for some time, needs to be finalised to ensure co-ordination with regional and local authorities’ policies to facilitate growth. • Plans for a runway extension and enlargement of the terminal building have been suggested. • If passenger growth forecasts are realised, transport infrastructure (both road and Metro) will have to be upgraded.
10
Glasgow Prestwick • Prestwick is Scotland’s fastest growing airport – passenger numbers grew by over 11% between 2004 and end of 2005. • The key issue for this airport is the requirement for new terminal facilities to cope with demand and projected growth, which is estimated to run above 12% pa over the next 10 years. • Recently completed space at Prestwick International Aerospace Park, developed by Scottish Enterprise Ayrshire, is being marketed by King Sturge. • The airport and surrounding area has an existing cluster of businesses involved in the maintenance, repair and overhaul (MRO) sector of the aerospace industry. Prestwick is the base for companies including BAe, GE Caledonian and the Goodrich Corporation, making it a key centre for aerospace activity in the UK.
• The regional and local authorities recognise that infrastructure improvements, largely road improvements, will be necessary to allow for predicted passenger growth. • Growth forecasts by the airport suggest that 8.3 million and 12.3 million passengers per annum could be using the airport by 2015 and 2030 respectively. • Despite recent development activity, office space supply and take-up has been such that available stock is both limited and fairly new. Leeds Bradford International • Located approximately 10 miles north-west of Leeds • 13th largest UK passenger airport • Airport masterplan forecast growth to 4.7 million passengers pa by 2016 and 7 million passengers pa by 2030 • Regional and local planning policy recognises the importance of the airport to the local economy and provides for road and transport infrastructure development to facilitate growth • The provision of “employment land” adjacent to the airport should also facilitate growth • The airport is scheduled to be sold by the local authorities which own it, with shortlisting of potential purchasers likely to be in January 2007.
Liverpool John Lennon • Located 7 miles south-east of Liverpool’s centre. • Has experienced very rapid passenger growth – up by 31.5% between 2004 and 2005. • Consultation on the draft masterplan has ended. The draft version provides for improvements to the runway, expansion of the terminal building and associated facilities.
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King Sturge: Airport & Ports Property Market 2007
European Property Markets
of downward pressure. Improved growth is attributable to stronger economic performance and improving volumes of cargo passing through European airports, as a result of stronger international trade.
The following analysis looks at hypothetical rents and yields achievable in the off-airport market on prime out-of-town office or industrial/warehouse space.
Pan-European prime industrial yields mid 2006
European off-airport industrial property
15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3%
Western and Central Eastern Europe: Prime industrial rental values Q2 2006 (e m2 pa 250 >5000m2
2,000,000 >1,000,000
Göteburg
>500,000 >100,000 Felixtowe
Southampton
Rotterdam Antwerp
Hamburg Bremen
Le Havre
Major overland freight routes
Bordeaux
Antwerp
Hamburg
Rotterdam
Athens
Source: King Sturge; Port of Hamburg, autumn 2006
Major sea freight routes
Amsterdam
Copenhagen
Felixstowe
Hull/Imminghan
TEUs
