commercial property 19 Investment and rentals in growth
Whichever of the latest industry reports you read, the message is clear; the market for commercial property is on the up, providing sound and growing return on investment. Senior partner at Eric Robinson Solicitors, Geoffrey Onoufriou (pictured), can provide testimony to these findings from a marked increase in business across the Solent
According to research conducted by advisory firm DTZ, commercial property investment reached a record high last year, with an 11% rise in turnover to £56 billion and a particularly strong performance in activity outside of London.
In fact, in its 2014 UK Investment Market Update, DTZ said the primary driver was a 40% growth in investment outside London, rising from £26b in 2013 to £36b in 2014.
Perhaps as a direct result from such investment, CBRE has noted a dramatic increase in commercial property rentals. The research firm has signalled an end to the recession-induced crash in rental values with a surge which is at the highest level since the third quarter of 2007, and further rapid growth in sight.
The estimated value for transaction had reached £61.7b in 2014 compared to £54.5b in 2013, breaching the record of 2006 before the recession hit.
From our base in Southampton, we have seen a huge increase in activity across the region from existing clients expanding their
property portfolio, negotiations between landlords and their business tenants and contracts being drawn up for new working relationships.
While many have been frustrated at the length of time it has taken for the market to regain its confidence since the crash of 2008, I have always used the analogy of the speed of a rollercoaster. The market has taken a slow, steady climb to the point of healthy business, along with trepidation and suspense for some on the ride, but now we are toward the top, growth should accelerate in speed at an exciting pace, providing great reward to those who were able to hold their nerve.
If businesses start up or outgrow their current premises, then there is inevitable demand on space
Southampton and South Coast among top UK regions for direct real estate investment
JLL director expects to see continued appetite for direct real estate investment in the South Coast region, driven by a number of factors including economic growth, the expectation that property prices will increase and the low cost of borrowing
’The UK investment market is currently experiencing unprecedented investor appetite’
The South East was among the top-three UK regions for direct real estate investment in 2014, according to new data released by leading property consultancy JLL.
Direct real estate investment in the South East hit £5.7 billion last year, representing a 29% rise on 2013.
Olly Paine, director of capital markets at JLL, covering the southern region, said: “Southampton and the South Coast are seeing strong economic growth, resulting in a welcome boost to the commercial property market.
“This has in turn attracted a number of occupiers and investors to the region. Indeed, office deals in Southampton and the South Coast in 2014 were up by over 50% on the 2013 figure.“
Notable deals last year included the sale of Marchwood Industrial
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – APRIL 2015
Estate in Marchwood, Southampton, to Associated British Ports for £90 million. JLL acted on behalf of Oceanic Estates, the former owner of the site, which is one of the largest self-contained industrial/warehouse holdings in the South East with a total area of 113.73 acres.
Looking ahead, Noel Lander, director of capital markets at JLL, covering the South East, said he expects to see continued appetite for direct real estate investment in the South Coast region, driven by a number of factors including economic growth, the expectation that property prices will increase and the low cost of borrowing.
He said: “The UK investment market is currently experiencing unprecedented investor appetite.
“Considerable investor interest in the South East is largely due to positive signs in the occupational market together with the fact
the region has a more attractive income yield profile relative to central London and key regional markets such as Manchester and Edinburgh. In certain South East markets there is occupational recovery, while in the majority of other markets there is at least stabilisation.“
Across the UK, direct real estate investment hit a record £65b in 2014, 3% higher than the pre- recession peak in 2006 and 16% higher than 2013’s total of £55b. The UK is the second-largest commercial property market in the world, and now accounts for 18% of all global transactions.
One of the major drivers of growth in investment volumes was capital flows into the UK regions, which hit £28b, a 70% rise from the previous year and the highest on record.
The South East, Scotland and the West Midlands were the top three UK regions for investment. Scotland and the West recorded volumes of £3.2b and £2.7b respectively, representing an 82% year-on-year increase for Scotland and a 67% rise for the West Midlands.
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that can be charged at a premium. Some of our clients who have desirable locations or specialist facilities are once again being approached at the time of tenancy renewal.
At a time when the landlord might be growing in confidence and authority, it is important that they don’t lose their short-term memory. Lessons were learned by many during the recession in terms of contracts, including issues of break clauses and terms and conditions, so now is certainly not a time for complacency.
Details: Geoffrey Onoufriou 023-8022-6891 geoffrey.
onoufriou@ericrobinson.co.uk www.ericrobinson.co.uk
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