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Commercial property


The outlook for commercial property


Guernsey Tony Rowbotham, MD, Montagu Evans


I don’t think there will be a massive change in the commercial property market in the next 12 months. The cautious optimism should continue through 2012, yet uncertainty in financial markets needs to be overcome before people start committing to making big decisions. So until things stabilise in Europe, the big development projects in Guernsey are unlikely to move forward. On the plus side, there’s absolutely no sign of our property markets falling backwards either. At least the lack of new developments means good news for the prime buildings that are already up – as demand is outstripping supply, they can expect rental growth. And this makes it a very good area for investment interest.


Jersey Chris Daniels, MD, BNP Paribas Real Estate


As long as the macro-economy doesn’t get worse, I hope to see a steady rise in occupier demand through 2012 – even if those companies are sitting on their hands now. In the long term, there’s lots of pent-up demand from large occupiers, as they’re going to have to consolidate: they may have as many as six buildings and will be seeking to get everyone under one roof to achieve operational efficiencies. If the economy doesn’t get worse, there are several companies at the point of having to make decisions about moving soon. General rents will remain largely static, although prime rentals will pick up, as there’s a lack of good quality stock coming onto the market and little space around at the top end. Meanwhile the investment market will be slow and steady. If the slight improvements in the past six months are anything to go by, it should continue to improve next year.


34 PS February/March 2012


A tenants’ market The figures back that view. Historically, average take-up for office lettings across both islands has been 225,000 to 250,000 square feet per year. Last year businesslife.co reported lettings had dropped to more like 35,000 to 100,000 square feet. Things are improving slowly, but it’s weak, failing to yet break the 100,000 square-foot mark. What movement there is tends to take the form of multi-lets – small- to medium- sized businesses occupying a floor, rather than taking the whole building as they would have, say, seven or eight years ago. Chris Philpott, Head of Carey Olsen’s


Jersey property group, sees one key change since last year: the current landscape has become a tenants’ market, in which small- to mid-sized companies have real opportunities to secure second- tier office premises from landlords offering good incentives, like long rent- free periods and break options – terms not seen two or three years ago. “We’re still busy with existing tenants


renegotiating their existing leases with landlords, even if they’re not making bigger decisions on taking vacant space,” Philpott says. “If you’re not looking for tier-one stuff, there are opportunities.” As for the next 12 months, one thing


seems certain: uncertainty will maintain its grip. While the Channel Islands haven’t seen a depression in the market like, say, the City of London, companies are unlikely to commit to any big moves until Europe regains its confidence. The prognosis for early 2012, then? Wait and see. n


DAVE WALLER is a freelance business writer


PHOTOGRAPHS COURTESY OF BNP PARIBAS REAL ESTATE


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