With so many ups and downs during 2011 in the commercial property market, it does raise the question as to what we can expect in 2012. With the Olympics being hosted in Britain, which will have an affect on many commercial properties throughout the UK, what can the commercial property market expect next year? MOVEHUT investigates.
According to the Investment Property Databank (IPD), investors have seen a minor fall in capital values, which resulted in them having to manage their income in order to generate a profit. This is set to continue into 2012 as yields are forecast to float. However, there is expected to be a boost of investment in some particular markets, including: retail warehouses, industrial estates and shopping centres. Speaking of the opportunities, Nick Allan, a Senior Investment Director, put across: “A more diverse range of investors are eyeing the market, with particular interest in industrial estates, shopping centres and retail warehousing sectors up.”
However, Mr Allan believes that the South West of England will do significantly better than the rest of the country. He stated: “There is no doubt that the core economies of the south west are holding up better than others including Bristol, Bath and Exeter, as well as Bridgwater due to the proposed power station development.”
With predictions for investment in commercial properties looking bleak, what can we expect to see in the industrial market?
Will Nell, an Associate Director in Industrial Agency, believes that 2012 will see a shortage of good quality industrial properties available as demand continue to outweigh supply. Speaking of the market, Mr Nell, expressed: “The market is likely to suffer a distinct shortage of good quality buildings during 2012 as less new supply is brought to the market. Given the financial caution which prevails in the market, speculative construction is unlikely to happen in the short-term, with the result that a shortage of supply and continued demand at similar levels will result in increased rents and costs for occupiers.”
“Consequently, the better quality Grade B buildings will be taken up during the remainder of 2011,” he added.
Mr Nell gave his prediction of what he thinks will happen in the industrial market in the South West of England: “There is a good supply of available land in the Avonmouth area, but elsewhere in Bristol, there is limited availability, with a similar picture in Swindon, the other major market of the south west. However, it is likely that markets such as Exeter will also evidence greater activity over the next 12-18 months as new development schemes surrounding the airport attract occupiers.”
So, what can we expect from the office sector?
With many landlords and agents of available office space offering free rental periods and other incentives to attract tenants, it does give you the impression that the market is suffering. But according to Phil Moore, a Senior Surveyor at Office Agency, the market couldn’t be better.
Mr Moore predicts the office sector in 2012, to see: “An increasing proportion of grade B take-up going forward, following a return from the mid-sized professional and media sectors. Rents for better quality space are expected to remain largely unchanged over the course of the year and a modest reduction in rent-frees or other incentives available to incoming tenants are anticipated as the supply of grade A space reduces.”
Do you agree with these predictions? Do you think demand will outweigh supply during these tough economic times? Or maybe the Olympics in July will have an effect on the commercial property market? Like us, you will have to wait and see.
