commercial property
Looking to move?
TO describe the state of the commercial property market throughout the UK in 2011 as being challenging is a typical British understatement. Lifeless would be another, argues Haydn Thomas of Hutchings & Thomas Chartered Surveyors.
T
he picture is fairly gloomily universal across the country with pockets of brightness in some major cities but across South Wales as a whole the market has
remained fairly subdued to say the least. Iconic Clarence House in the centre of
Newport has proved of interest to occupiers over the past 12 months with a number of deals done. And property in the south Wales valleys, for example at Crown Business Park, near the important arterial Heads of the Valleys road, has been of interest to both leaseholders and those looking for freehold space. Opportunities are most certainly there to
be had for investors and agents as long as they adopt a lateral approach to procuring tenants for existing, redeveloped and speculative opportunities. Meanwhile, as almost without exception every
agent will tell you, the current leasehold market is very much loaded in favour of the tenant. Difficulties in the current market are that
agents are identifying potential occupiers who have requirements however the four traditional stages to securing occupiers are becoming harder to achieve. These four stages are identifying potential
occupiers who have requirements and matching them with properties that may be suitable; getting those parties to the premises to view; negotiating potential terms, which today would include a reduced rental, rent free, and landlord’s capital expenditure and finally re-negotiating the terms as the tenant has several options on the table. If you are lucky you get to the stage where you are instructing solicitors but then the tenant
46 THEbusiness QUARTER
approaches you to inform you that their current landlord has offered them better terms to remain where they are and the negotiations start again. Sigh. This process is basically the same across all
commercial sectors with a few exceptions. The freehold market across most sectors has
also seen a fall in demand however industrial premises in certain areas have been seen to “buck the trend”. Freehold industrial demand by owner
occupiers, who regard rent as ‘dead money’ has in certain parts of South Wales ensured that retained values have been maintained at a decent level. These deals are usually driven by local manufacturing warehousing companies either in the process of expanding or contracting from or to larger leasehold properties. It is important for investors, developers
and agents not to be ‘stuck in the moment’ and to look forward to a time when hopefully development funding and bank finance will be more readily available. It will be at this time that the lack of
development and investment over the past few years may cause inflationary problems with a lack of quality supply across most sectors linked with what hopefully will be increased demand leading to a lack of occupier choice and an increase in both rents and freehold prices. I believe it is up to both the private and public
sector to identify these potential issues on the horizon, assist developers and investments with sound advice and possible financial incentives, public sector, to begin developing new stock for what we fervently hope to be an improving market.
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