Well another year is upon us and we have had a very busy start both from residential, commercial and land interest. A very encouraging start on the sales front with renewed vigor in the commercial enquiries and levels of viewings have been unprecedented. Is this a sign of the year to come… I think so.
National commentators report low inflation, falling costs, solid jobs growth and rise in real wages will create a ‘confidence cocktail’ for businesses and consumers. This year is likely to see more employees escaping the trap of underemployment as optimistic businesses take on more full-time, rather than part-time staff. Alongside very weak inflation this will give a boost to real wages and household spending power. Businesses expect to grow in the first half of 2015, with consumers likely to enjoy the knock on effects,
The Chancellor will be looking to the housing market to support growth. But if average house prices drop by 0.6 percent in 2015 (as forecast by the Centre for Economics and Business Research last week), consumer confidence could take a knock and spending could quickly be reined in. In these relatively good times, the Government needs to do everything it can to support business growth, encourage long term investment and end underemployment.
In our area with a string of sales during the last half of 2014 a lack of available commercial property in the Black Country and North Worcestershire could impede market growth in 2015.
The improving warehouse and industrial markets – especially in the 10,000 to 20,000 sq ft sector – are at risk. Also the smaller commercial property market place where good freeholds well sought after with investment funds, pensions and SIPS giving added availability of funds with a good appetite for commercial and residential investments. Following very successful sale of the Prince of Wales Public House site in Hagley and the sale of 11 vacant houses contracted in the 2nd half of 2014 we are now left with 5 good quality well let investment properties where we expect good interests especially in the burgeoning Buy to Let” market.
The office market is also suffering, with smaller offices in short supply and a relative scarcity of good quality freehold office space for purchase. This shortage can be put down to companies expanding and taking the availability from the market and the fact there has been little refurbishment or speculative development taking place for the past few, which means that any that do come on to the market are snapped up very quickly.
We now have only one unit available at Hagley Mews and The Old Woodyard at Hagley with the latter being fully let, there are now 23 different companies here ranging from Beauty Therapist to Architects. Continued good levels of demand with existing Tenants expanding and taking longer term commitments will ensure that little space will be available through 2015, again a sign of diminishing stock.
The retail sector is more cautious having lagged behind the office and industrial markets in 2014 and there is nothing to suggest that things will be any different over the next year. However, the rise of click-and-collect services, as well as a growing population and the rise of destination retail areas means that footfall could well be up in 2015. How this affects rents and the performance of the sector remains to be seen.
The upcoming Election is also starting to create some caution and uncertainty but with the outcome unclear, we will have to wait to find out if there will be any serious implications for the commercial property industry.
On the face of it a good year ahead is expected, the level of stock is causing concern so if you or your company are experiencing growing pains the time is right to consider the future, values will increase in due course and the rules of supply and demand will trigger. The investment market is good for the right products well priced especially with long term secure income streams.
A very Happy and Prosperous New Year to all.