The West Country


The Gloucestershire Market - In My View initiatives and capitalise on the surge in rental growth.


Dorian Wragg is a Partner and Head of Commercial and Professional Services Faculty at Bruton Knowles, the UK-wide Chartered Surveyor firm.


He has been working with clients operating in the South-West for over 25 years, and has been at Bruton Knowles for the last 7 years.


He is a Fellow of the Royal Institution of Chartered Surveyors, Fellow of the Non-Administrative Receivers Association; Member of the Board of Advisors, Cheltenham Economic Advisory Board; Board Member, Gloucester Property Forum and Chair of the Retail and High Street Business Group at GFirst LEP.


In the South-West, a chronic shortage of industrial stock persists, driving rental prices upwards as developers adapt their pricing strategies to capitalise on the limited supply.


Meanwhile, occupier demand for industrial spaces is burgeoning, fuelled by economic growth in some sectors such as logistics and distribution centres.


Rental growth in the region has reached unprecedented levels over the past eighteen months, reflecting the imbalance between supply and demand, with void rates hovering around 2%. Escalating material costs and borrowing/ interest rates have further compounded the situation, exerting upward pressure on rents as developers strive to cover their increasing expenses.


And tenants increasingly favour energy-efficient and sustainable spaces, with preferences for sites offering energy security and proximity to transport and labour markets.


In parallel, investors are renewing their interest in secondary industrial estates, seeking avenues to drive value through asset management


Yet, despite some market hesitancy it seems that positive investor sentiment prevails, anticipating a resurgence in the occupier market.


The past year has been challenging for the office sector, particularly outside of London. While the capital has witnessed a resurgence in new office developments to meet the demand for high-quality space, speculative projects in other regions have been limited.


Notable exceptions include The Forum scheme in Gloucester, targeting the cyber, digital, and technology sectors. A joint venture between Reef and Gloucester City Council, the scheme is at the vanguard of several developments aimed at the cyber, digital/technology sector in Cirencester and Hartbury, as well as the eagerly anticipated Golden Valley scheme in Cheltenham.


One prominent trend is the shift in office dynamics, with occupiers opting for smaller spaces due to the rise in remote work. Despite this, they are willing to pay more for high-quality environments that support collaboration, productivity, and employee well-being presented in sustainable and employee-centric designs. This is due to the growing recognition among leaders of the value of in-person collaboration for training, mental health, and organisational culture.


Decreased valuations of office properties have led to the redevelopment of some buildings for alternative uses, such as residential and student conversions. This, however, has led to concerns about market saturation in smaller towns and cities.


Overall, the second half of this year is likely to be much different to the first. Trends will be clearer, with more economic stability which will encourage further speculative development to balance supply and demand, creating much calmer waters and allowing us to catch our breath.


Hilco Lends Over £5m to Back South West Residential Property Development


did not wish to extend. The developer turned to HREF which was able to provide a development exit bridging loan to give the developer the time it requires to market and sell the units.


Sean Adams, managing site. As they


HREF, said: “We were pleased to assist the borrowers who have


nine high-quality units on this attractive, historical


Specialist bridge lender Hilco Real Estate Finance (HREF) has backed south west based Somerton Constuction Limited with a £5.1 million loan secured against nine high spec residential properties. The 12 month loan was underwritten at a 75% LTV.


Located on a historic site in Somerton, Somerset, the nine-property development


had experienced some


delays and cost increases, mainly as a result of Covid. With the development having just achieved practical completion, Somerton Construction’s existing lenders had reached the end of their term and


COMMERCIAL PROPERTY MONTHLY 2024


director of developed approached


practical completion, they needed some additional


time to properly market


and sell the individual units. Our ability to provide the required LTV on very competitive terms, and our experience closing similar transactions enabled this loan to complete smoothly.


“As is often the case, they are a strong business with a viable project which happens to fall outside normal the strict criteria of many traditional


lenders.


Fortunately, as a group of experienced finance professionals, we were able to take the time to understand the business and this particular project, and to provide the flexible lending facility they needed.”


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HREF is headquartered in London and has offices throughout the UK. It is a fully integrated subsidiary of Hilco Global, the multi-national financial services group with more than $3bn of assets under management. HREF builds on Hilco’s long established credentials as a lender, valuer and asset manager. For more details please visit www.hilcoglobal.com


HREF were supported on the deal by law firm Clarion and by Savills.


HREF provides bespoke, flexible property finance solutions nationwide across various real estate sectors and capital structures. The specialist real estate lender offers short term loans for growth, transition, acquisition opportunities, development exits and refinancing exits, and with a sizeable balance sheet, it can consider loan sizes ranging from £1m to £50m+.

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