Demand For Industrial Units Growing, But Office Market SlowJune 2011
The Worcestershire commercial property market reflects the national economic situation, with manufacturing improving and the services sector flat, according to John Dillon, managing director of specialist Worcestershire property consultancy JP Dillon Commercial Property Consultants.
“Manufacturing is bouncing back across the county with an increasing number of industrial units coming onto the market and being snapped up, while the office market remains slow, as the service sector is unwilling to commit to new leases,” says Mr Dillon.
“The general shortage of ready to go sites and lack of stock continues to push up industrial and distribution rents and freehold values, providing an opportunity for landlords and developers who can quickly bring the right sites and stock to market to meet the demand,” continues Mr Dillon.
“In Redditch, for example, we have had a very strong response from both developers and investors in the 2.6 acre Troy Industrial Estate on Jill Lane in Sambourne, which has come to the market for the first time in 30 years.”
Troy Industrial Estate presently has four industrial units and an office building covering more than 13,500 sq ft, and planning permission, granted in 2005, for a further four industrial units totalling 20,000 sq ft.
Mr Dillon says: “At a guide price of £650,000, there have been many expressions of interest, especially when you consider that new small industrial freehold units in the area are going for around £95 psf.”
According to Mr Dillon, service businesses remain reluctant to commit to long term expenditure, including new leases, resulting in a slow take up for office space throughout Worcestershire.
He says: “Institutional investors are recognising the value in the office market and are seeking out prime office freeholds particularly in Worcester, but at present many smaller businesses are content to remain in serviced office centres rather than taking on an office and a lease of their own.
“Traditionally these smaller companies have provided the growth at the bottom end of the office market, but with economic prospects uncertain they still prefer to pay higher rents for the flexible terms available at serviced office centres,” explains Mr Dillon.
“The tough office market means that there are good deals out there fore any tenants who are looking for new premises, but also critically to existing tenants who have lease ends or break dates coming up in the next two years. The void rates changes have meant that landlords are much more eager to retain tenants than having to pay dreaded void rates.
“Well over 20% of our time at present is negotiating re-geared leases for local occupiers who are starting to fully understand that they are in a position of strength.”
Despite the well publicised troubles of Southern Cross, the care sector in the county remains buoyant with a number of care home acquisitions. In Bromsgrove town centre JP Dillon has shortlisted three developers from more than 15 expressions of interest in a 2.31 acre site for redevelopment as a high quality extra care village.
Mr Dillon says: “The level of demand for this high density residential scheme suitable for retirement living shows that there is an appetite to acquire from large developers providing it is in the right sector.”Return to News