The North West
The Cheshire Industrial Market Remains Resilient Reports Matthew Pochin BSc (Hons) MRICS Industrial, Investment & Development Director Legat Owen
What is astounding is the positive manner in which the private sector and specifically the industrial occupiers of Cheshire and the wider North West react to market adversity.
During the late autumn of 2022, we experienced a seismic shock to the UK economy which cost us collectively billions of pounds. Admittedly
the lending market
was always going to evolve and interest rates were going to rise but no one could predict the speed at which rates rose and the whole lending environment flipped on its head and affected individuals and businesses.
We could have all “downed tools” and rioted, like one of our continental friends, but we did not. More specifically, the businesses of Cheshire dusted themselves down and carried on regardless.
We may have seen a slowing of new developments of all scales throughout the county and land values, in places reduced by 30-50%, effected by high yields and inflation hit high build costs. Developers who have acquired sites in the last 12 to 18 months just cannot make schemes stack. Those lucky enough to have land banks or perversely been affected by the glacial planning system for several years are the only ones able to start development. For example, Total Developments acquired 12 acres in Middlewich some 4 years ago and another 3 acres in Widnes 24 months
ago. Their appraisal still work off the historic values that the land stands them in at. This has led to them having the ability to bring forward two SME schemes providing 11 units ranging from 15,000 to 40,000 sq ft. This an exception to the rule at present.
An economist looking in would suggest that this is “counter cyclical”, and they would be absolutely right if you are minded to “down tools” and riot, but shrewd if you realise how resilient and entrepreneurial the industrialist of Cheshire are.
Legat Owen monitor industrial enquires and deal completions on a monthly basis and month-on-month they have both been in parity with the more buoyant times of Q3 and Q4 2021. With the impending effect being demand pressuring supply and under pinning rental levels as evidence by headline rents for new and modern units have hit £9 per sq ft in South Cheshire and £10 per sq ft in Warrington.
Secondary rents have also benefitted, with good quality older stock actually experiencing growth in Q1 of 2023. With limited new buildings on the horizon there will be continued pressure on stock and rent levels. This will not change until rents are at a level to support new build appraisals and the institutions and property companies re-enter the market and provide yield certainty.
There are still major hurdles for the market to contend with and adapt to, all borne out of major political and geo-political events but the resilient and adaptability of our business sector makes up for the political incompetence and irrationality we have recently experienced.
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COMMERCIAL PROPERTY MONTHLY 2023
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