Buying or selling warehouses, retail parks or offices?
Wed 15 Mar 2023
What's the Commercial property market like right now for investors, landlords and occupiers? Our experts give their views.
The Regional Dynamic
The current macro-economic outlook in the UK is dominated by rising interest rates (to curb double digit inflation); rising prices (driven by increased fuel, gas and electricity prices) and rising wage demands by various public sector bodies.
So, how has all of this impacted the Commercial property sector?
Although there has been uncertainty affecting the Commercial market, we are well placed to be the chosen agent to lease units in one of the county's most high profile business locations."
James Cameron, Head of Business Space and Investment Agency, Commercial, Lincoln.
James Cameron, Head of Business Space and Investment Agency, Commercial, in our Lincoln office, said: "The market for small to medium sized industrial and warehousing units has been particularly strong, both in the freehold and leasehold sectors.
"Although there has been uncertainty affecting the Commercial market, we are well placed to be the chosen agent to lease units in one of the county's most high profile business locations.
"For example, we are letting a detached new build in one of the premier business venues in Lincolnshire, Teal Park, home to the likes of Siemens and Jaguar Land Rover.
"Our client will shortly commence construction of a high specification, new-build industrial unit/distribution warehouse which will have a gross internal area of approximately 25,000sqft.
"It will include a seven metre eaves height, a three phase electricity supply with 125 kVA, a 35 kN/m floor loading capacity and four level access, four metre-wide electric sectional loading doors."
"It will boast electric car charging points and 45 car parking spaces. The building will allow sub-division to suit individual requirements from 5,000 sqft upwards, subject to suitable lease and rental terms being agreed with any in-going tenant."
A number of our occupational clients have decided to move out of industrial estates located in London and the South East, attracted by the lower rents and costs/overheads our region offers."
Phil Cottingham, Head of Commercial Agency, St Neots.
Phil Cottingham, Head of Commercial Agency in our St Neots office, said: "Across the counties of Cambridgeshire and Bedfordshire, the industrial/warehouse sector remains strong, but the emphasis for prospective occupiers is increasingly on value.
"A number of our occupational clients have decided to move out of industrial estates located in London and the South East, attracted by the lower rents and costs/overheads our region offers.
"We have, for example, a 14,000sqft modern warehouse for rent for £104,000 per annum. However, there is a distinct shortage of freehold warehouse property in our region and demand outstrips supply.
"Evidence of this shortage is that we are marketing a 7,400sqft Commercial unit in Eaton Socon, for sale for offers in excess of £650,000, which is now under offer.
"The other trend driving this change is the farming community diversifying their businesses and offering former agricultural sheds for Commercial use. In many cases, these properties offer a more attractive rental and location compared to equivalent purpose-built industrial estates."
Phil Cottingham said: "The demand for retail space remains remarkably resilient for strong market towns, particularly St Ives and St Neots which are performing well.
"Demand is generally from local independents and strong regional operators. Other sectors that are driving demand include dentists, vets and cosmetic surgery practices.
"For example, we are currently working on re-purposing an old supermarket in Tebbutts Road, St Neots into a mixed use Commercial scheme which will provide modern retail and office space as well as residential accommodation."
Alistair Anderson, Town Planner, based in our Lincoln office, said: "The modern-day shift in consumer shopping patterns is no secret and the traditional high street has had to adapt.
"Factors such as home working and online shopping have had an impact on the retail and office markets and the necessity for occupiers to have a central presence in town and city centres.
"In the last 18 months, we have seen a relaxation of certain Permitted Development Rights to allow easier change of use applications, particularly the rights enabled for the change of use of Class E into Residential Development under Class MA.
The government’s intention is to help the high street diversify into a mix of uses including leisure, business, retail with residential, to increase its offering and vibrancy."
Alistair Anderson, Town Planner, Lincoln.
"This idea was to enable quicker change of use transition rather than having to apply for formal planning permission and help combat the housing crisis.
"There is a general fear that this may lead to an over-concentration of residential homes interspersed on the high street, however the government’s intention is to help the high street diversify into a mix of uses including leisure, business, retail with residential, to increase its offering and vibrancy.
"Some councils have been keen also to promote the idea of extending the high street use to after 5.30pm when the shops close.
"At the forefront of many town centre policies within the Development Plan is the concept of ‘vitality and viability’ which underpins the types of uses councils wish to see within their centres."
"What we have witnessed in recent times, is that due to the lack of demand and increasing vacancies, some councils have taken a pragmatic approach to filling these units and have grown open to facilitating other uses as long as their policy is supportive.
"It is a growing concern that the high street is not the ‘retail hub’ it once was and it is encouraging to see that the planning system does offer mechanisms which allow for change of use away from retail.
"The common consensus is that retail should not be completely lost from the high street and policies such as ‘primary shopping frontages’ are in place within some Local Plans to try and retain this presence."
Phil Cottingham said: "The office sector does, perhaps, face the biggest challenge in the regional Commercial property sector. The necessity to work from home during the various Covid lockdowns has left an indelible mark on this market.
"The ability to work flexibly is now a way of life and the need for a permanent home for the computer, desk phone (if you have one) and penholder is fast receding.
"However, small inexpensive office suites remain in strong demand as they provide a cost effective 'hub' for companies which are downsizing their office requirements.
"Larger office buildings, perhaps more of a challenge to let or sell, are fast becoming an attractive proposition for property investors for conversion to residential, particularly if the property is historic, boasts original features and in a good location.
"We have advised clients on various office sales in Huntingdon, St Ives and St Neots where the properties have been purchased by entrepreneurial developers obtaining the relevant planning permission to convert old office stock for residential use.
"There has been much publicity around The Old Grammar School, St Ives which was sold for conversion to apartments and we have been marketing for sale a similar proposition; Montagu House in Huntington, ripe for residential development.
"This 18th century property received strong interest and is now under offer."
Currently, the market is not for the faint hearted meaning it's more important than ever to seek our advice to maximise your Commercial advamtage, whether as an investor or occupier."
Phil Cottingham, Head of Commercial Agency, St Neots.
James Cameron said: "We anticipate inflation will start to fall which will lead to lower interest rates and borrowing costs which hopefully should see a resurgence in the supply of, and demand for, all types of Commercial property as well as improved business conditions."
Phil Cottingham said: "Despite the economic headwinds, we are still seeing good interest from both investor and occupiers in the right properties in the right places.
"When selling property of any kind, they need to be properly priced, reflecting the market conditions. Currently, the market is not for the faint hearted meaning it's more important than ever to seek our advice to maximise your Commercial advantage, whether as an investor or occupier."
For more information contact James Cameron in Lincoln on 01522 457172, Phil Cottingham in St Neots on 01480 479089 or Alistair Anderson, Lincoln on 01522 504315.
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