Is the Commercial property sector defying market uncertainty and volatility?
Thu 31 Mar 2022
The last 24 months have dished up uncertainty on a Biblical scale with political turbulence (Trump/Biden), Brexit and COVID/Lockdowns/Global pandemic.
And now we have escalating costs of living, rising inflation and the crisis in Ukraine.
Despite all of this, the industrial and warehouse sector has grown from strength to strength, with an increasing and sustained demand for space in our region.
This is due to a limited and depleting industrial supply of just 4.1% on one side, coupled with an ever-growing appetite for distribution space fuelled by growing online sales.
The result has seen a steady and very noticeable increase in rents for industrial space – rents for decent quality second hand units in Norfolk are now hitting £6.50 - £7.00 sqft, whereas the same space was achieving £5.50 - £6.00 sqft two years ago.
There has been very little speculatively built new space in Norwich for years, and for those developers who have been bullish, they have been rewarded with rents of £8.50 sqft in places like Dereham and Wymondham, at £9.00 - £9.50 sqft in Norwich.
One such scheme is Northwood Urban Logistics Diamond Point, a newly completed development of 17 units from 3,123 sqft to 18,152 sqft, where rents north of £9 per sqft are being achieved. I anticipate we will be seeing more new build schemes coming to the market soon.
Even at these levels, Norfolk is a cost-effective location compared to our near neighbour Cambridge, where industrial rents are £10 per sqft to £17 per sqft.
The knock-on effect is that industrial development land has also seen an increase in value, in some cases up by 25% in 2 years.
So with all the uncertainty on our doorstep, and in the wider world, it is good to see this positively performing sector of our Commercial property market.
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