Traditionally, being centrally located and reasonably well balanced demographically, the East Midlands has reflected trends and sentiment in the licensed property and business sales market.
However, it usually manages to escape the extremes - the highs and lows - the market can produce in other parts of the country. This is borne out by analysis of market activity in the region over the past year, which can clearly be separated into three distinct market segments: city centres; suburban towns and residential belts; and village and rural.
In terms of trading performance in these market segments, from an operational point of view and in terms of market demand from a seller's point of view, there were winners and losers in 2006.
City-centre units on average experienced a squeeze on turnover and profitability. Most city-centre operators we advised in the East Midlands in 2006 saw a deterioration in trade of between 10-15 per cent on the previous year, due to a range of factors. These included the decline in the appeal of the city centres in the evenings due to the perceived threat of violence. Beneficiaries of this trend have been the smarter suburban town-centre operators, both new and established, who have also seized upon the opportunity provided by the relaxation in licensing hours permitting them to challenge city centres' historic stranglehold on the late-night bar and club trade.
Convenience by virtue of being close to home, a more friendly and less threatening environment, and the appeal of new and innovative trading concepts have all contrived to deflect trade from the city centres.
The city-centre operators are, however, mounting something of a fightback by lobbying and demanding the city councils - notably Nottingham, Leicester and Derby - to do more to promote the city-centre environment.
The operators themselves have, albeit with varying degrees of success, adapted their offering in recognition of the transitional nature of their market - from daytime café-bar dining appealing to shoppers and the city office market, through early-evening drinks trade to late-night bars presenting a direct challenge to the traditional nightclub market.
However, the cheap, high-volume shots and shorts operators will continue to undermine progress as long as they continue to determine the mood on the city streets. The government campaign to promote responsible drinking is less likely to have an effect than market forces.
The village and rural market has seen good growth. This has been generated principally by improving food offerings and either providing a more contemporary interior design or playing to the strengths of features such as beams, log fires and flag floors.
The net effect of these trading trends is to determine not only turnover and profitability in their respective market segments, but also market demand and thereby relative market values.
Consequently, we are keeping a close eye on deal values relative to the multiple of profit achieved. Recent successful sales in Nottingham city centre include Skin Bar, a contemporary bar in Lace Market, which recently sold off an asking price of £295,000 (leasehold) and the Turf Tavern in Upper Parliament Street, which sold off an asking price of £50,000, a Punch Taverns tied lease.
As to what 2007 holds, we believe that unless the image of the city centres in the East Midlands improves, the slide out of town may well continue with the prices in the city hardening.
The suburban town centre units such as those in West Bridgford, just south of Nottingham, will continue to flourish, with an upward pressure on prices following demand.
Rural pubs, pub-restaurants and inns will similarly gain pace in terms of value, particularly in the freehold and leasehold freehouse market. Bearing testimony to this, Ye Olde Cheshire Cheese, a freehouse in Castleton, Derbyshire and the Crown Inn in Sproxton, Leicestershire recently sold within weeks off asking prices of £795,000 and £450,000 respectively.