Despite the current economic climate, South West specialists Vickery Holman are pleased to report there is still reasonable activity in both the freehold and leasehold markets for all property types.
Joanne Harwood has recently joined the Plymouth agency team initially dealing with industrial disposals. Joanne comments “The industrial sector has been the least affected by the recession with values dropping by between 20% and 25% throughout the recession.” The market is dominated by second hand stock, with a lack of new units available. This trend is likely to continue for the foreseeable future as developers are not keen to undertake developments on a speculative basis. This is because the rental levels currently achievable do not reflect a good enough yield to warrant developers constructing properties.
Vickery Holman have been successful in selling Unit B9 Plympton Park leaving just 2 units available. These brand new units are 2,385 sq ft each and are available for £208,000. The success in disposing of these units just highlights that if priced correctly there is still a reasonable demand for freehold units.
The larger end of the market which is dominated by manufacturing companies continues to evolve as it always has done in Plymouth. Vickery Holman are acting in disposing of the Former St Ives Factory, Langage Industrial Estate following consolidation of Wyndeham Groups printing business. However every cloud has a silver lining with this 142,819 sq ft unit set in grounds of 11.05 acres being the only complex of this size currently available in the South West. Joanne Harwood comments “With a quoting price of £2.5 million it would cost an occupier more to build a unit of this size and specification, thus this represents a unique opportunity for a key employer within the South West to own their property.”
In terms of the office market there has generally been a lack of investment in maintenance over the years. Along with no new development this has lead to a limited amount of Grade A office space within the City. People have become increasingly aware of building running costs and are also striving to be green. As such it is likely the future will see buildings with BREEAM Excellent ratings and good EPC ratings (above B) be the properties that attract the major requirements. Vickery Holman have a dedicated BREEAM assessor who can advise on improving a buildings sustainability. In fact Vickery Holman are currently advising clients who own City Centre offices on working towards achieving this.
Currently the majority of office requirements are for sub 2,000 sq ft. However large requirements do become active every once in a while with Vickery Holman having recently sold Plumer House, which is 90,000 sq ft to Plymouth Community Homes. Anthony Eke MRICS comments “The acquisition of Plumer House represents a huge investment into the City and more importantly maintains jobs, which is vital if we are to improve our economic circumstances.”
Retail is undergoing a huge change with Vickery Holman’s predictions for the future being that the prime pitches and district centres will be where growth returns to. Retail has been the most affected sector of the market with rents in somewhere like Cornwall Street dropping from £60 ITZA to £25 ITZA. This does however pose an excellent opportunity for investors to acquire these properties at a reduced value with growth potential within the next 5 years.
In terms of investment the continuing gloomy economic outlook during 2011 convinced vendors that matters were not going to improve and Vickery Holman saw the establishment of a new lower trading level, resulting in a greater volume of transactions. As such 2012 started with a flourish but the continuing mood of uncertainty has delayed investor’s return to the market, with some high profile receiverships bringing more stock on to the market, there continues to be downward pressure on values.
Mike Oldrieve of Vickery Holman comments “For private investors, up to £1 million remains the most active market as existing and new entrants to the market look for a return on their savings, which they are not getting in the bank. Looking forward, we expect values to fluctuate slightly throughout the year, but we do not expect any further major falls despite the gloom, suggesting the time to buy has arrived.”
