Well summer seems to have started well – hot weather and a very good result for our footballers.
The commercial property and land market in Kidderminster is changing. Demand now seems to be improving together with activity in the land sector, especially for residential or mixed use opportunities. Freehold property is in demand in both the commercial and office sectors.
Wyre Forest like many local authorities have issues regarding availability of land for residential development and the thorny subject of the green belt review is firmly on the Agenda. The rate of housebuilding is still not meeting demand. It is time for those holding land and property assets to look at the development prospects, take clear advice from professionals and in particular Land and Planning Specialists, this is an increasingly complex area and easy to overlook essential matters that may have a significant impact on success or failure.
We are very active in this area at present considering a number of potential development opportunities, both big and small with signs of considerable success. It is also interesting to note that opportunities a few years ago that where very unlikely today may have more chances of success in light of the changing Planning rules and improving market conditions.
The view from the Royal Institution of Chartered Surveyors regional review says – don’t panic. There continues to be a severe shortage of modern industrial and office accommodation with the strongest demand for freehold properties. Freehold remains with strong demand driven by both investors and potential owner occupiers. Retail is of concern where shops are staying empty longer and lettings are long and drawn out. Trade Counters and BI are relatively good but road side users seem to be more cautious.
Investments are difficult to buy at realistic figures but then sellers will argue differently. There is plenty of activity but not always leading to a conclusion.
There is still uncertainty in most sectors ahead of Brexit, but with interest rates low, property is still seen as an attractive investment. There is a distinct gulf in the retail sector between national/large regional retailers and smaller/ independent ones. The former have shot themselves in the foot with their out of town location policies over the last 20 years or so and their recent dash to catch up with on-line retailing with the effect that they have severely damaged the high street. Large shops appeal generally only to these retailers and demand from them for these has virtually dried up. On the other hand there is still a positive and vibrant demand from individual retailers. Hence rental levels/values are declining in the High Street large shops sector whereas smaller units find tenants.
The national investor sector will have to change their thinking on what to do with the increasing stock of empty town centre shops. Market towns in Worcestershire continue to have reasonably well represented retail sectors with steady demand. The office sector continues its recovery with a noticeable improvement in demand for small suites for start-up and small businesses. Large space users are also becoming increasingly active. This is also mirrored in the industrial sector where the shortage of supply is now being felt. Rental and capital values may well push upwards through imbalance between supply and demand.
A recent warning from the insurance industry estimates that most commercial properties, and many residential blocks, are under-insured by between 20% and 45%, reducing pay outs for damage because the wrong valuation figure was submitted to the insurance company when the policy was taken out.
With commercial property being under insured, insurance companies will pay out on a pro-rata basis. Therefore if you are under-insured by say 30%, the claim will be reduced by the same amount. Insurance companies require an accurate updated reinstatement cost, this is not the freehold value of the property. Construction and material cost have changed significantly over the last few years so accurate current figures are essential – take advice from a Professional Valuer.
So the lesson is if you are looking at your property ownership take professional advice on how to maximise your returns. If you are looking for new premises don’t rely on going just “on-line” it maybe to late so talk to the experts then they will be ahead of the market when new property becomes available.