The East Midlands A Phoenix Will Arise…


5,000 miles away in an area little known to many, the shape of 2020 was emerging. The events in Wuhan were initially deemed insignificant here in the U.K. with domestic news events dominating the headlines in January such as; the Duke and Duchess of Sussex stepping down from official duties and Boris Johnson’s EU withdrawal passing through Parliament.


23rd March 2020 marked an unprecedented date for the majority of UK citizens, the date of which Boris Johnson announced a ‘UK wide national lockdown’. The weeks leading up to this date had already cause mild panic with supermarket shelves empty of ‘essential’ items and billions being wiped off the stock market. The result was uncertainty.


Uncertainty is the dreaded word for all investors. I recall how volatile the economy became the last time uncertainty was banded around back in 2008, none more so than within the commercial property sector whereby irresponsible lending had led to a vast amount of ‘toxic / bad’ debt causing billions to be wiped off the value of commercial property and highly incentivised deals to secure a property. Looking back it was madness but Vendors / Landlords / Investors were desperate to cover the debt on the property with many having to undergo painful restructuring of finances.


Fast forward 12 years and the dreaded “Uncertainty” word was being uttered again. What would this mean for us and what would happen over the next 12months, in particular the retail sector which had


By Scott Osborne MSc MRICS Director Innes England


already taken a battering from e-commerce? Well unlike the 2008 uncertainty, which had financial origins, the 2020 uncertainty was more of a pause in the economy whilst both government leaders and scientist across the world raced to understand Coronavirus-19. Well, after a brief pause, the construction sector resumed activity with house-builders and commercial developers continued with partially developed schemes. Then what felt like ‘Deal or no Deal’, the phones began ringing with new enquires as people had realised that this wasn’t the end and business would continue albeit with slightly different working practices.


Where once high street retail was deemed the safest investment class there was a shift to the industrial market, the new king in town - this shift had already been occurring but had gain significant momentum during 2020. In Nottingham we had seen industrial investment yields hit 5.5% where city centre high street yields can be as high as 10%. It wasn’t just the investment market that saw the change, the occupier market also saw a huge transition. Industrial rent had already seen an upward trend from 2016 whereby good quality secondary rents were achieving c.£4.50psf, this upwardly trend had hit £5.50 psf in 2019 but during 2020 we were concluding deals in the region of £6.50psf, and even higher for trade counter occupiers where headline rents of £9.75psf have been witnessed. In fact our research demonstrated that the number and total sq ft of industrial transactions in Nottingham, was similar to 2019 levels, despite a pause in the economy. Although the Nottingham industrial market was buoyant, life was not a bed of roses for the Office and Retail sectors.


Take-up for office space during 2020 had dropped to under 300,000 sq ft (2019 was 387,000 sq ft) and availability had increased to approximately 625,000 sq ft (2019 was 595,000 sq ft), this level of take-up was below the 10-year average. It was clear that employers had to rationalise their approach and other than labour costs the holding cost of space has been under scrutiny. We have seen many firms consider down-sizing as they adopt a work from home policy which many have in place today - will office life resume? To an extent I suspect it will however with a degree of flexible working arrangements.


So what about retail? A month ago there was more uncertainty when John Lewis announced that it was going to close 8 more stores - there was even speculation that Nottingham might be on the list of casualties. Fortunately this was not the case although there had been an several casualties cumulating with the news of Debenhams closing its doors. The Debenhams store used to occupy a prominent position fronting market square in the heart of the city and with the doors due to close for a final time this will be a sad state of affairs but not is all doom and gloom as from the ashes hopefully a new phoenix will arise......


www.innes-england.com


Next Phase of Vesuvius Gets Underway at Worksop


Property development and investment company, CEG, has appointed Harris CM to construction and FHP and Fisher German to market the next phase of the multi-million pound redevelopment of the Vesuvius site in Worksop.


The first phase will provide 46,000 sq ft of industrial and retail space adjacent to the recently opened Asda superstore. It includes three flexible food and beverage units and 16 light industrial units ranging from 1,200 to 5,000 sq ft, subsequent phases


will offer larger employment units including speculative as well as pre-let, design and build development. D2N2 LEP CEO, Sajeeda Rose said:


The first pre-let has already been secured to Burger King with a number of other deals well progressed with a variety of occupiers. This first phase will be ready for occupation in summer 2021.


Antonia Martin Wright, head of investment at CEG, said: “This first phase of employment units will establish Vesuvius


“The Vesuvius site represents a landmark development for Worksop and the wider area. The major investment provided by D2N2 will have a transformative effect by attracting investors and businesses and unlocking opportunities for new jobs, supporting our collective ambitions to rebuild and grow our economy.”


as the prime industrial and business location in Worksop. It will be the largest speculative scheme of this scale and quality in Worksop for many years and demonstrates CEG’s commitment to the town.


“We are encouraged by the interest in the site and with such a shortage of supply of well located, flexible accommodation we expect it to swiftly let, particularly as improved road networks and new homes are bringing more inward investing businesses into the area.”


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COMMERCIAL PROPERTY MONTHLY 2021


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