2013 – More of the same?
The ongoing issues in the global, European and domestic economies will mean that we are unlikely to see any significant growth in the local commercial property market in Essex and Suffolk over 2013. However those businesses that have successfully adapted to the more challenging trading conditions believe that the worst is over and there appears to be renewed optimism fuelling plans for cautious business expansion and demand for commercial premises.
We are seeing a steady increase in the number of property investors and speculators coming back into the market and anticipate that this trend will continue throughout the year. There are certainly some attractive opportunities for those with funds available, in a position to take a long term view and with an appetite for active management.
With regard to the different sectors, we expect to see a reasonable level of demand for industrial/ warehouse units over all size ranges, albeit there is likely to be a shortage in relation to some types of buildings, such as larger modern warehouses over 10,000 sq ft. With proposals for Sizewell C, off-shore wind farms and a variety of large solar PV installations, the energy sector is bound to have a positive impact on investment in infrastructure, the creation of new jobs and the demand for industrial property in the area. The 18 months rates relief announced in the Chancellor’s Autumn Statement for newly built properties was a positive step; whether it will encourage speculative development in the short term remains to be seen.
The market for offices in all our regional towns is likely to remain patchy, with take up being similar to last year. There is still a significant rental gap between existing office stock and the levels required to fund new development. This is likely to result in difficulties in relation to unlocking the viability of new schemes, but with the increasing shortage of grade A space, the better quality refurbished premises are likely to see some modest rental growth which should continue to close the gap.
The High Street retail sector will prove to be the most challenging. There have been some significant out of town successes in recent times but with continued growth of internet shopping combined with restricted consumer spending, the future for the High Street continues to look precarious. With the recent demise of Comet, Jessops, and HMV, the Local Data Company warns that the retail vacancy rate could reach an all-time high of 16.5% – more in light of the recently reported demise of Blockbuster. Landlords will continue to do what they can to attract new tenants and a combination of reduced rents and more flexible lease terms may well help to draw occupiers in to town centres from the periphery.
In summary, the next 12 months will be a challenge but there will always be opportunities for those who are prepared to adapt to an ever changing market.
Alistair Mitchell, Partner (Ipswich Commercial team)