Demand for commercial property increases

Thirteen per cent more surveyors in the West Midlands reported increases rather than falls in demand for commercial property, up dramatically from the previous three months. Demand for industrial space in the region grew at the fastest pace, suggesting a broader recovery in firms’ appetite to increase their businesses in this sector.

Respondents to the survey noted that rent levels had been affected by changes in empty property business rates. This is a particular problem where there are high levels of empty commercial space, such as in the Midlands and Wales.

Turning to the investment market, surveyors suggest that unwillingness by banks to lend at competitive rates is continuing to discourage investors, which is being particularly reflected in a depressed market in secondary property.

Funding availability is going to be a key factor in sustaining the upturn during the remainder of the year. Due to the strong recovery in the industrial sector we expect the demand for prime industrial space to strengthen. As the year moves on it is our expectation that Banks and UK institutions will start to release more assets to the market, leading hopefully to renewed funding.

When considering funding and despite the reticence of the major banks, valuation of your property assets is important to ensure the investment is aligned with expectations and all is being done to maximise the return. An audit of property assets and their management becomes an increasing necessity and a current view of value and likely expectations will help as we emerge finally from the downturn. Professional valuation through RICS valuers is strongly advised.

At Walton and Hipkiss we are preparing well for the continued upturn having strengthened our Commercial Team with the appointment of Janis Borley as Surveyor who will undertake Agency and an increasing volume of valuations, the Commercial Team are registered Valuers and regulated fully by the RICS. Janis will also be working alongside the Residential Team with our New Homes Division.

Locally we have seen an increase of some 35% in the volume of viewings with a similar increase in new instructions, retail and commercial lettings and sales are underway with a larger number now entering lawyer’s hands and proceeding to a successful conclusion. Those landlords and property owners who are flexible are now seeing rewards with some tenants taking space.

The land market also has seen a marked increase on activity especially from the larger national developers who are back with a vengeance. Smaller developers and smaller sites are still subdued predominantly due to funding availability, but encouraging signs of lenders coming back to the market are emerging. Residential is leading the way and demand for new homes in the right locations is improving, values are firming with little signs of any major positive growth.

We are newly marketing a number of properties on both High Street and the Ring Road and these are attracting a good level of interest not only from retailers but also developers and contractors looking at potential alternative uses for the upper floors – predominantly for residential to create small one and two bed affordable units for key workers and the new employees generated from the Tesco development.

Stourbridge isn’t alone with the majority of upper floor accommodation in many High Street’s being totally underutilised, these can be converted into residential accommodation both for key workers and others who will benefit form proximity to town centre services. Stourbridge is very well provided with the New Bus Terminus directly adjacent to the centre along with the railway station with direct connections to Birmingham City Centre and beyond.

All in all good signs of positive movement and a better mood in the commercial property market. Deals are hard to achieve and desperately slow… but deals are there to be done.