An upbeat end to the year both nationally and in our own town, the third quarter UK Commercial Property Market Survey published by the RICS (Royal Institution of Chartered Surveyors) again shows a healthy rate of demand growth across both occupiers and investors, with improvement continuing all over the UK. Available supply, however, remains firmly in decline. Current market dynamics therefore continue to place significant upward pressure on rents and capital values.
Focusing on the occupier market, our survey feedback indicates demand from tenants continued to rise for a twelfth quarter in succession. Each of the three traditional sectors (office, industrial and retail) recorded a firm pick-up in demand during Q3, albeit improvements in retail remain more modest in comparison. Alongside this, availability of leasable and saleable space contracted once more, marking the tenth consecutive quarter of declining supply.
This combined with low levels of new development over recent years, has led to shortages of good quality space, particularly in the industrial and office market. Some rents had risen as a result, but were yet to reach the levels required to stimulate speculative development outside prime locations. Take-up of industrial space had increased, with fewer disparities between demand and supply than in the office sector, as availability had started to grow earlier. A shortage of offices and industrial units in Stourbridge area and North Worcestershire is putting upwards pressure on prices as demand for commercial property remains strong. Lack of stock, particularly of well-priced freeholds, makes it the best time since the credit crunch to sell.
If the final quarter of 2015 follows suit as we move into 2016, there will be a definite requirement for developers and land-owners to recognize that demand and invest in speculative development to fulfil it.
We now have more sales and lettings agreed than any quarter over the last 5 years with completions now happening at a faster rate. Again putting pressure on available stock, this is now finally culminating in developers considering new construction particularly in the industrial and office sector added to which they are reactivating schemes that have laid fallow during the recession. So if you are considering the future use of your property or land it is time to consider what to do, our advice is take advice from a Chartered Surveyor and commercial property expert.
Finance has again eased, although major UK lenders remaining somewhat cautious. We have a number of transactions underway on the sale of office freeholds involving SIPP and pension acquisitions making purchasing far more popular with this increasing availability of liquid funds.
The Bank of England quarterly property market survey, to which we are a participant, reports “housing market activity had risen modestly, but remained constrained by a shortage of properties available for sale. Intense competition was reported in the mortgage market, driving increased remortgaging activity. Occupier demand had risen in the commercial real estate market, with rents reported to have increased in many areas. Strong investor demand was reported to be putting upward pressure on property values.”
With investment in business and positive sentiment in new employment companies seem to be growing and that is true for Walton and Hipkiss.
In early December we will be opening a new full service office in Kidderminster.
Based in the heart of the town centre our bespoke sales and lettings office, both for commercial and residential property, will deal with the growing and improving markets in Kidderminster and reaching out to Stourport on Severn, Bewdley, Bridgnorth and the wider north Worcestershire areas. The improving economy and rising housing market has enabled us to return to the town after some 50 years absence.
Andrew Hipkiss, Senior Partner says “this is a most exciting time in our long history to return to such a great town enabling our total property sales and lettings service take advantage of the improving market place and offering new and existing clients the same high quality service at the cutting edge of technology.”
So a positive end to the year and we all wish a Happy and Healthy Christmas to each and every one and lets us hope for a prosperous and successful 2016 – I think it will be a cracker!