Leisure can be so exhausting. Hardly a month passes without a new sports chain or theme restaurant blossoming. Pubs change hands like like Smarties in a playground and dense analytical reports are peppered with weird terms like Est Est Est, warm shells, double bubble, Tootsies and Slug & Lettuce.
What happened to the days when you could be confident of a snapshot of the market from a few blue chips like Whitbread, Rank and Pizza Express?
One major problem for City analysts is getting a grasp on such a vastly diverse market. Players are spread across two stock exchange sectors covering activities as diverse as health clubs and brewing. Many of the most active are still so young they are lumped into general figures of the Alternative Investment Market. Others, like City Grove, are private, while even more are subsidiaries of overseas companies. To cap it all, much of the current development is carried out by specialist funds. The biggest problem, however, stems from the rapid changes taking place across the industry.
'It's corporate turmoil out there,' says Mark Girling of Knight Frank. The sector is seeing a collision of old and new economies painfully familiar to property companies trembling in the shadow of the dot.com revolution. While newcomers float on a tide of venture capital, the market value of many established names has halved.
Headless chickens rule. Bass is dumping centuries of tradition to get out of low-margin brewing. Whitbread looks set to follow, ploughing £575m into buying Swallow Hotels instead. Scottish & Newcastle, however, is selling out of leisure and positioning itself as an international brewer after buying Kronenbourg.
Cinema groups have proven just as contrary. After two years of frenetic growth, Virgin folded into UGC, Warner pulled in its horns and and Hoyts departed altogether. Now they are bouncing back, blaming a temporary shortage of blockbuster films for the plateau rather than market saturation.
Meanwhile every fashionable high street has sprouted an eaterie or theme bar with names picked out of an acid dream. They are matched only by a growing regiment of fitness clubs designed to work off those accumulated calories.
At least the sector is moving away from what a City analyst once dubbed 'the paralysis club'. The nickname was far too hasty. Trevor Watson of leisure specialists David Coffer Lyons points out that occupiers went into overdrive as the country came out of recession, racing for places in high streets and leisure parks. The Beer Order, forcing brewers to divest pubs also drove frenetic buying and selling.
At first sight, weakening share prices appear to have stifled that flow, but the reality is an obsession with corporate restructuring to satisfy demands for increasing shareholder value. That ranges from sideways moves between leisure sub-sectors and giant mergers such as the S&N/Greenwells and Wolverhampton/ Marstons deals.
Newcomers have also caught the urge to merge. Size is vital to gain investor support and spread overheads, says Watson, who is nursing through a clutch of further mergers and acquisitions.
This has left investors in limbo. Restructuring has added further uncertainty to the risks of what is still considered an immature market. There is also 'no sound evidence' yet that the market has turned around, says James Clark of CB Hillier Parker.
Girling is another mourning the virtual absence of headline deals, although he points out that while rents weakened as occupiers took advantage of playing hardball in the slowdown, off-market activity indicates yields have remained stable at 6.25% to 6.5% for prime rack-rented investments.
The problem is that there are not enough of these around. Apart from specialists like MWB, THI and City Grove, the industry has been slow to build a strong supply. There is some excuse because of tougher planning restrictions but investors would be relieved to see more developers follow the lead of Land Securities, which is putting together the Gate leisure development in Newcastle.
A few are hacking paths through the confusing undergrowth. MWB and THI are giving institutions a foothold in the sector with their leisure funds. City Grove has also attracted the likes of National Mutual, which backed its Colonnades Park in Croydon at an initial 6.75% yield.
One of the big hitters, Prudential Property, was widely reported as shunning the sector. Investment director Chris Taylor shrugs off the rumours, pointing to one deal for a leisure centre in Huntingdon and another couple in the pipeline. But he emphasised that just because prime stock was rare, funds would not put up with secondary material.
'It has to be sustainable,' he says. 'I'm suspicious of crinkly sheds in the middle of nowhere.' He favours edges of towns, with good parking and public transport links and the possibility of alternative uses like retail if circumstances change.
For all the uncertainty, few doubt the underlying potential of the sector. 'The amount of money spent on leisure has exceeded food for the first time,' says James Welch, head of leisure at Jones Lang LaSalle. 'People worry over the impact of e-commerce on property but they fail to see the positive side. It will give people more free time to take advantage of the continuing increase in real incomes.'
Like Taylor, he sees town centres winning premiums for leisure schemes which can offer 18-hours of business, seven days a week rather than the limited hours of stand-alone schemes. They no longer need anchoring with a multiplex once critical mass is achieved, he says, pointing to Wilson Bowden's 100,000 sq ft development in Milton Keynes, bought by Deutsche Property for 20m pounds, on a yield of 6.75%.
This illustrates how the market is dividing, with softer yields on more remote schemes. Roger Ahmed of GVA Grimley agrees that neither tenants nor investors will compromise on quality, and a shadow must hang over off-centre developments facing obsolescence and decline.
'Management will also become a big problem,' he says. 'It was often ignored in the past but with new schemes coming on stream a quality gap will emerge.'
Andrew McGregor of FPD Savills also pulls figures out of a hat to illustrate how sub-sectors will boom. 'Only 5% of the UK population belongs to a health and fitness club. That is half the US level.'
Brands like Fitness First and Holmes Place are carving huge niches, helped by a flexibility of approach by developers that puts the rest of the industry to shame. Fitting-out costs as high as 3m pounds a pop would normally be far beyond these newcomers. Healthlands has created a turnkey package with a base rent on the shell and a medium-term loan for the interior.
Cinema operators can get a similar deal. These are not rich companies, as they operate outside their parents' covenants, says McGregor. Fit-outs of up to 150 pounds/sq ft can be a huge barrier to launching a site, so a developer may provide a 'warm shell' which is partly fitted out with a loan or paid for with deferred rent rises.
This lubrication of the pinch-points of development could help see the sector through a critical period. Girling points out in Knight Frank's Leisure Review that when interest rates were falling, investors benefited from a 'double bubble' of rising rents and falling yields. Now the sector is going through a sea change as rising rates drive out debt-driven purchasers. Corporate turmoil has created further uncertainty.
But at times like this, investors gravitate to quality, and he expects yields to hold steady for the best assets as institutions slap money on the table to compete with players like MWB.
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