Nottingham is well placed to benefit from companies looking to north shore, said JLL at its annual property predictions event, as rising house prices in London and the southeast drive large corporates out of the capital.
The housing crisis is becoming less of a social policy issue and more of a economic one, said Jon Neale, JLL’s head of research: “Businesses are now raising this as a major concern as London’s competitiveness is being damaged by the inability of its workforce to find anywhere affordable to live and Nottingham is towards the top of its list for locations to move more secondary staff to.”
Matthew Smith lead director of the Nottingham offices of JLL said: “With cranes now back on the skyline, new infrastructure and an ever improving retail and leisure offer, the city has become a stronger magnet to office occupiers, resulting in take up predicted to be up by 15% in 2015. For businesses now, it’s all about the location that really works for their staff, clients and to attract new talent. With two strong universities, Nottingham provides an attractive proposition to companies looking to north shore and keep their competitive edge.
“This is also an influencing factor for many companies looking to return from the outer town locations to in town, where Nottingham rents are comparable, so the transition is easier and increasingly the accessibility and amenity offer in the city is what young, aspirational generations demand. For out of town locations to survive they will need to differentiate themselves by amenity, infrastructure or price.”
Rents will continue their upward trend in 2015 Matthew continued: “The East Midlands supply remains tight and the prospect of new development being delivered in 2016 is limited. This weight of latent and competitive demand will help increase rents further, with office rents expected to approach £20 per square foot in 2016. Similar drivers apply to the industrial markets. There are core markets within the East Midlands, with almost no modern stock and the impact this is having on economic growth is now on the radar of the local politicians and city leadership.
“Land supply remains one of the key constraints on delivering new and efficient commercial space into the region. A protracted and politically weighted planning system has failed to facilitate demand, with a lack of real synergy between our city and outlying councils. The North Midlands devolution agenda will help alignment but in the meantime we have to deal with these land supply challenges. We consider the demand is there for speculative development to commence both in the office and industrial market – the lease data supports this and we believe as land does come forward in 2016, we will see a commitment to build speculatively.”
JLL completed four million square foot of industrial deals in the Midlands in 2015, predominately big sheds -100, 000 sq ft and over. However in 2016 Matthews said he saw speculative building returning for new ‘urban logistics’ units 15-100,000 sq ft – an event not witnessed for nearly 10 years.
Urban Logistics units too will be attracting investors says Allan Wilson, director and head of investment at JLL. “A return to the classic multi-let unit will be seen and smaller units capable of “last mile delivery”.
Matthew concluded: “There is definitely an optimistic mood for 2016 and whilst geopolitical issues such as BREXIT may create a pause, we believe Nottingham has the potential to move forward if more proactive and commercial public sector intervention takes place to address office and industrial shortages to enable strong local economic growth.”
