Spirit Business Village - Phase 2 (Cell 4B)

Location: Liverpool International Business Park, Speke, Liverpool

Completion Date: June 2008

Property Status: To be confirmed

Deal Structure: A private syndicate

About Spirit Business Village

The Spirit Business Village in Liverpool International Business Park is located adjacent to the Liverpool John Lennon Airport, which is Europe's fastest growing airport with passenger figures predicted to exceed 4.5 million before the end of 2007. The airport connects to more than 70 destinations, with daily flights to London and a new daily service to New York taking off in May 2007.

Liverpool has continued its rapid evolution and the city centre office market in particular has witnessed significant expansion. City centre take-up of circa 498,000 sq ft in 2005 was the highest level in a decade.

Demand has been such that there is currently very little new Grade A office stock available. However, the city has a robust development pipeline with a number of significant new schemes coming on stream and a new prime rent of £20.00 per sq ft is expected to be set this year. See image below.

There has been a substantial level of speculative warehousing development in Merseyside and developers have focused on the region as a prime distribution location. One of the area's attractions is its affordability, with prime land values currently circa £250,000 per net developable acre, and there remains a healthy availability of well located sites

Investors' perception of Liverpool has also changed significantly. New development and a strengthening corporate occupier market are underpinned by comparatively low rents, indicating a margin for potential rental growth. As a result, prime office yields in Liverpool have recently been subject to greater compression than in any other UK regional city, currently standing at 5.00%.

Strong demand for good quality office accommodation in the city has left little available floor space. City centre take-up in 2005 of circa 498,000 sq ft was the highest level in a decade and continuing demand in 2006 has led to the remaining 42,500 sq ft at City Square being the only new Grade A floor space available, and the majority of this is under offer.

Liverpool has continued its rapid evolution, exceeding both the regional and national GDP growth rates in the early 2000s. Merseyside is also projected to outperform significantly in the future. Having previously experienced long-term average annual GDP growth of 1.3%, Experian Business Strategies forecasts that during the next 15 years this will improve by 100 basis points to 2.3% p.a.

Momentum picked up notably when Liverpool was selected to be the European Capital of Culture in 2008. Acting not only as an impetus for new construction, it also precipitated citywide programmes of refurbishment and civic realm improvement.

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