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IS
THIS THE NEW NORMAL ??
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The property market has undergone a period of
significant volatility as we have all witnessed and
now the commercial property market is starting to
settle to a new rhythm is this the new normal ? Only
time will tell but we continue to see short term
flexible leases become the norm with tenants having
the ability to exit accomodation on easy terms. Rent
free periods and other inducements are fully available
as are fitting our packages this is both true in the
commercial and new residential markets.
The landscape for both occupiers and investor /
developers has changed significantly over the past few
years and values show signs of rallying from the 40%
drop witnessed from 2007 to 2009. Finance for property
investment and development is still proving very
difficult to secure , not surprising perhaps with an
estimated £50bn of the £300 bn debt in breach or
default. With all this news however there are good
signs for rental and capital growth over the next 5
years patience is a virtue!
Land is still at a premium in the better locations and
increased activity is evident from both large and
small developers land values are not changing
significantly and nowhere near the levels of 4 to 5
years ago in some instances still at 50 to 60% of
those values. This level of interest in land I believe
will continue as the residential market continues to
improve although patchy in places.
The market for larger industrial / logistics in good
locations has improved and with the lack of
speculative development is in some instances becoming
scarce. Secondary industrial market is still
realtively quiet.
The retail market in Stourbridge ,Dudley, Brierley
Hill, Halesowen and Kidderminster is still at a low
ebb with no real signs of increased activity. Maybe
the exception is Stourbridge where a groundswell of
activity is emerging with the news of Tescos new
store looking like it could be open in 2012.
The office market is fairing slightly better with
increased activity, notably Hagley Mews at Hagley Hall
has been particularly successful in attracting new
tenants the message to be learnt there is good well
fitted accomodation on flexible terms does let !
Many occupiers are struggling with their property
overheads and are looking to downsize, exercising a
break clause correctly is an absolute essential. Using
a break clause may seem to be heavy handed but getting
your landlords attention and the ability to
renegotiate terms and size of accomdodation is timely.
They will be happy to negotiate with the tenant as
they do not want to face a vacancy - they will find it
hard to replace a tenant particularly one who is known
to them.
If you are having problems with your property
overheads dont be afraid to approach your landlords
take advice from a Surveyor to see if you can offset
costs or even share accomodation with another company.
It is best to act without delay whilst the issues can
be potentially resolved before matters get a lot
worse.
Ask your Surveyor to give a you a property health
check and see what can be done to enhance your own
position.
With all that said we continue in difficult and
volatile times but the signs are encouraging for the
short to medium term.
Alan K Knight FRICS
Head Of Commercial
Walton and Hipkiss Stourbridge
01384 397 797 |
