Heathrow Airport Property Rents 2013/14 Consultation Document Date: 5 th July 2013 Prepared By: Heathrow Airport Limited Status: Final Page 1 of 11
Heathrow Airport Property Rents Consultation Heathrow Property Rents 2013/14 1.0 Introduction 1.1. The purpose of this consultation document is to set out Heathrow s proposal for the level of property rents for 2013/14 and invite the Heathrow community to provide views on the proposals. 2.0 Heathrow Property Rents 2013/14 2.1. Heathrow consults every year with the Heathrow community on setting levels of rent from 1 st April. 2.2. Heathrow is proposing to increase property rents for 2013/14 in line with the Guide Price formula; the details are set out in Schedule A. The final published Guide Prices will take effect from 1 st April 2013. 3.0 Consultation Programme 3.1. Heathrow is inviting comments from the Heathrow property customers on the proposal so that these can be considered when we make our final decision. 3.2. A consultation meeting will be held on 15 th August 2013 the closing date for written comments is 13 th September 2013. Heathrow will then announce the final level of property rents by the 27 th September 2013. 3.3. The reason for the start of the consultation after the start of the Guide Price year on 1 st April is due to the late availability of the IPD data for the rents formula. The consultation period of twelve weeks has been chosen to enable a reasonable period for consultation and the Guide Prices to be published as soon as possible following the release of the IPD data. 3.4. The publication of this consultation paper on 5 th July 2013 is the start of our consultation on the annual setting of property rents for 2013/14. Page 2 of 11
3.5. The consultation programme is as follows: Date Milestone 5 th July 2013 Heathrow publish consultation letter on Heathrow 2012/13 rental proposals 15 th August 2013 Consultation meeting 13 th September 2013 Property customer written responses due 27 th September 2013 Heathrow publishes 2013/14 rents effective from 1 st April 2013 4.6. Any party wishing to comment on the proposal must submit responses in writing. Written responses should be sent to: property@heathrow.com 4.7. Alternatively, written comments may be posted to the following address: Guide Price Rents 2013/14 Consultation Heathrow Property Department Heathrow Airport Ltd The Compass Centre Nelson Road Hounslow Middlesex TW6 2GW 4.8. If you have any questions on the consultation document please contact Heathrow Property on the above e-mail address. Page 3 of 11
SCHEDULE A 1.0 Background Property Rents at Heathrow 1.1. Since 1996 Heathrow has had a list of published Guide Prices. The Guide Prices are either a band or spot rent for the majority of standard property products. 1.2. Since 1996 the Guide Prices have been adjusted by the percentage change in a rental formula, which is applied annually to the Guide Prices once consulted with the AOC Rents Group. 1.3. Following consultation the tariff rents were simplified in 2008 and the formula has evolved since it was first introduced. 1.4. The components of the current formula, revised in 2002, are as follows: 1.4.1. Passenger Numbers. 1.4.2. Retail Price Index. 1.4.3. Investment Property Databank (IPD) Annual Property Index the average of Central, Outer and West of London Office Indices (see Appendix 1 for the geographical area). 1.5. The formula gives equal waiting to each component. 1.6. The formula seeks to provide consistent growth flattening the peaks and troughs associated with the external property market. This can be seen in the attached graph at Appendix 2. 1.7. Desk licence fees are reviewed biennially also using the Guide Price formula, they were reviewed in 2012 and will not be reviewed this year. 2.0 2013/14 Rental Proposal 2.1. Heathrow is proposing to increase property rents for 2013/14. A full schedule of the proposed rents is attached at Appendix 3. A schedule of the 2012/13 rents is attached for comparison purposes at Appendix 4. 3.0 2013/14 Rental Calculation 3.1. The rental formula has produced an overall increase of +2.09% for 2013, the calculation is set out in Appendix 5. Page 4 of 11
APPENDIX 1 IPD Index Geographical Areas Page 5 of 11
APPENDIX 2 Graph of Historic Changes in the Rental Formula Components Page 6 of 11
APPENDIX 3 Proposed Guide Prices 2013/14 Heathrow Airport Rental Guide Prices - Effective from 1st April 2013 Rent / sq ft Rent / sq M Min Max Min Max Terminal 1 Second floor office 64.48 694.08 CIP 72.57 781.10 Piers - standard ramp 36.28 42.95 390.49 462.33 Piers - first floor 37.73 44.41 406.14 477.98 Terminal 3 North Wing 58.04 624.79 South Wing 64.48 694.08 East Wing 62.40 671.72 Departures ground floor R/O check-in 49.35 531.16 Departures ground floor off back corridor 43.53 468.59 Infill Offices 64.48 694.08 CIP Departures 72.57 781.10 CIP Arrivals 68.92 72.57 741.82 781.10 Piers - standard ramp 36.28 42.95 390.49 462.33 Building 820 First and Second Floor 51.62 555.61 Ground Floor 54.42 585.74 Bays 33.83 364.19 D'Albiac House Bays 30.45 327.81 Page 7 of 11
Offices (Outer offices) 46.74 503.07 Offices (Inner offices) 45.43 488.97 Terminal 4 NE Extension, Balcony 64.48 694.08 Departures rear of check in 49.35 531.16 Mezzanine airside 46.45 499.99 Standard ramp 36.28 42.95 390.49 462.33 CIP 72.57 781.10 Terminal 5 CIP - T5A 79.81 859.08 CIP - T5B/C 75.83 816.21 T5A - Landside offices/support accom 69.96 753.06 T5A - Airside offices/support accom 57.53 619.23 T5A - Airside apron level support accom (Ramp) 45.11 485.51 T5B/C - Airside offices/support accom 54.79 589.80 T5B/C - Apron level support accom (Ramp) 44.03 473.92 Desk Frontage Rates - All Terminals Check-In 504.69 1,655.78 Sales and Reservation 1,044.92 3,428.16 Transfer 504.69 1,655.78 Information 774.81 2,541.99 Unless otherwise stated: The Rents are exclusive of Maintenance Rent and Heating Rent or Service Charge All rents (except CIP) assume measurement based on net internal area A discount of 10% is given for No Natural Light, unless all the accommodation in the category has no natural light Where there is a price range, actual charge will be based on the overall quality and location of accommodation. Typically, new build will be at the top of range. Page 8 of 11
APPENDIX 4 Guide Prices 2012/13 Heathrow Airport Rental Guide Prices - 2012/13 Rent / sq ft Rent / sq M Min Max Min Max Terminal 1 Second floor office 63.16 679.86 CIP 71.08 765.09 Piers - standard ramp 35.53 42.07 382.49 452.86 Piers - first floor 36.96 43.50 397.81 468.18 Terminal 3 North Wing 56.86 611.98 South Wing 63.16 679.86 East Wing 61.13 657.95 Departures ground floor R/O check-in 48.34 520.28 Departures ground floor off back corridor 42.64 458.99 Infill Offices 63.16 679.86 CIP Departures 71.08 765.09 CIP Arrivals 67.50 71.08 726.62 765.09 Piers - standard ramp 35.53 42.07 382.49 452.86 Building 820 First and Second Floor 50.56 544.22 Ground Floor 53.30 573.73 Bays 33.14 356.73 D'Albiac House Bays 29.83 321.09 Offices (Outer offices) 45.78 492.76 Offices (Inner offices) 44.50 478.95 Page 9 of 11
Terminal 4 NE Extension, Balcony 63.16 679.86 Departures rear of check in 48.34 520.28 Mezzanine airside 45.50 489.75 Standard ramp 35.53 42.07 382.49 452.86 CIP 71.08 765.09 Terminal 5 CIP - T5A 78.18 841.48 CIP - T5B/C 74.27 799.48 T5A - Landside offices/support accom 68.53 737.63 T5A - Airside offices/support accom 56.35 606.54 T5A - Airside apron level support accom (Ramp) 44.18 475.56 T5B/C - Airside offices/support accom 53.67 577.71 T5B/C - Apron level support accom (Ramp) 43.13 464.21 Desk Frontage Rates - All Terminals Check-In 504.69 5,432.41 Sales and Reservation 1,044.92 11,247.39 Transfer 504.69 5,432.41 Information 774.81 8,339.95 Unless otherwise stated: The Rents are exclusive of Maintenance Rent and Heating Rent or Service Charge All rents (except CIP) assume measurement based on net internal area A discount of 10% is given for No Natural Light, unless all the accommodation in the category has no natural light Where there is a price range, actual charge will be based on the overall quality and location of accommodation. Typically, new build will be at the top of range. Page 10 of 11
APPENDIX 5 2013 Rental Formula Calculation 2011 2012 % Change Passenger No.s (1) 69,391,400 69,984,868 +0.86% Retail Price Index (RPI) (2) 239.4 246.8 +3.09% IPD Annual Property Index (3) (3) (3) +2.33% Average % Change +2.09% Notes: 1. Passenger numbers for the preceding year, January December. 2. Retail Price Index (RPI) (All Items) Index figure for December of the preceding year. 3. Investment Property Database (IPD) Office Rental Value Growth for the preceding year. 2011 2012 % Change Central London 202.3 210.5 +4.05% Outer London 171.8 175.4 +2.10% West of London 130.2 131.3 +0.84% Average +2.33% Page 11 of 11