property Commercial property – market overview
Hughes Ellard assesses the current state of the commercial property market’s principal sectors in the Solent region
RETAIL & LEISURE
Overall the retail and leisure market has been steady in the first half of 2016. There have been some notable casualties on the high street, including BHS, Austin Reed and Store Twenty One, but landlords have sought to treat the demise of these companies as an opportunity to introduce new tenants.
Director Tim Clark comments: “There has been reasonable take-up across all elements of the retail and leisure sectors. In the high street active occupiers have included The Works, Warren James Jewellers, Grape Tree and COOK all of whom have taken a number of stores. Larger space occupiers such as Poundland, Pound World, B&M Stores have continued to expand.”
The leisure sector remains buoyant as town centres continue to accommodate an increasing proportion of leisure occupiers. Companies that have been particularly active include Loungers, Nandos, Coffee #1 and Anytime Fitness. Watermark West Quay Southampton has announced details of the 20 leisure occupiers taking space within the scheme.
Vacancy rates in high streets and retail/ leisure schemes across the South Coast remain low. Other than Watermark West Quay, there is little significant new space coming to the market across the South Coast.
It is anticipated that occupier demand will remain consistent for the remainder of 2016. There is unlikely to be significant rental growth within either the retail or leisure sectors.
OFFICES
A lack of supply of good quality space has emerged as a key issue in the office market. Director Nik Cox notes: “There has been no speculative office development since 2007 and this has left a huge hole in the market. At the South Coast’s premier office park at Junction 9 of the M27 the vacancy rate sits at about 150,000 sq ft, just over 10% vacancy of the total of 1.4 million sq ft. This is well below the figure from three years ago when it exceeded 30%.”
The story is similar in the city centres of Portsmouth and Southampton, where supply has been further constrained by the conversion of older office buildings to flats or student accommodation. Cox adds: ”Usually this lack of supply would lead to further new-build office development, but there is also a lack of ‘oven-ready’ sites to enable developers to start construction. I anticipate over the next 12 months that more older-style office buildings will be completely refurbished to create the Grade A accommodation which is currently being sought.”
The current pipeline of office transactions is strong, with take-up for 2016 forecast to exceed the long run average of 300,000 sq ft.
INDUSTRIAL AND LOGISTICS
A lack of supply is also the critical issue in the market for industrial and logistics space. Associate director Harnish Patel comments: “Supply has been an issue for the market for the past three years and currently stands at a critically low level of 4.1%. The lack of new stock coming online is very limited and has resulted in new development and triggered the refurbishments of existing premises. Recent pre-lets include 160,000 sq ft to Curtiss-Wright Controls at Bournemouth Airport and 80,000 sq ft to FatFace at Portsmouth City Council’s scheme at Dunsbury Hill Farm, Havant.”
The lack of supply has exerted upward pressure on rents and prices. Patel notes: “Rents have increased by over 15% in some parts of the region over the past 12 months, as demand has remained steady, whilst supply has continued to fall.
“There are a number of key strategic sites in the region with the ability to satisfy future requirements, including Velocity, a 120,000 sq ft scheme in Havant, and Berewood, a 22-acre industrial development site in Waterlooville, with the ability to cater for units upwards from 5,000 sq ft.”
Gary Jeffries 01329 222830 07976 397698
www.hughesellard.com
THE BUSINESS MAGAZINE – SOLENT & SOUTH COAST – SEPTEMBER 2016
businessmag.co.uk 49
The leisure sector remains buoyant as town centres continue to accommodate an increasing proportion of leisure occupiers
It is anticipated that occupier demand will remain consistent for the remainder of 2016
The current pipeline of office transactions is strong, with take-up for 2016 forecast to exceed the long run average of 300,000 sq ft
Harnish Patel
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