With the upturn in business investment and employment growth, Kent and Medway’s commercial property market is witnessing the return of rental growth, according to the Kent Property Market Report 2015.
Produced by Caxtons Chartered Surveyors, Kent County Council and Locate in Kent, the report was launched at the Mercure Maidstone Great Danes Hotel, along with a new KCC-led initiative to ensure vital infrastructure is in place to support predicted growth in commercial and residential development.
The report is encouraging news for the office sector with the return of rental growth for the first time since the global financial crisis hit in 2008. While rental growth in the county is still slightly behind the national and South East averages, the report describes the upturn as significant.
Additionally, the report states that the recent past has left rents in the county relatively affordable when compared to the rest of the South East, making Kent an attractive proposition for relocating and expanding businesses.
The county’s key business parks of Crossways, Discovery Park, Gillingham Business Park, Kings Hill and Kent Science Park, all recorded important deals and investment announcements.
Kent’s town centre office markets followed the national trend with many offices being converted to residential units thanks to the Permitted Development Rights legislation.
Elsewhere, rental growth in the county’s warehouse sector of 0.2% outperformed UK and regional averages, while the retail sector also saw growth after five years of falling rents. With demand steady, and supply low, Kent has seen speculative industrial and distribution developments, including Ashford, Aylesford and Kingsnorth.
Caxtons’ Chairman Ron Roser said that as main sponsor and contributor to the Kent Property Market Report, the firm was especially pleased to see that the continued improvement in the property sector is reflected in this year’s research findings.
“Kent has mirrored other occupational office and industrial markets outside London in demand and rental growth. In turn, this has sustained investor interest, and when strong assets do come to the market there is increased interest and competition.
“Consumer confidence has fuelled the residential market with a promise of almost 27,000 new homes for the county. There is marked activity on development sites across the county. This buoyancy has proved to be an impetus to major regeneration schemes with a strong residential component.
“There is comparatively slower growth in the retail sector with limited rental improvement but business parks are experiencing a resurgence and in many cases, old office and dated office stock has been refreshed and converted to much needed residential dwellings.
“In general, improving infrastructure and on-going regeneration has positively and directly benefitted Kent, presenting us with many more opportunities than in the recent past. This year’s Report reflects the buoyancy across the industry and it is welcomed by all.”
A clear indication of the growth in demand in the county has come from Locate in Kent, the county’s investment promotion agency, which helped 46 companies, 16 of them from overseas, to set up in the county in 2014/15, bringing with them 2,612 jobs.
“The Kent Property Market Report reflects the level of growth across the county, which is at its highest for many years,” said Paul Wookey, Chief Executive of Locate in Kent.
“As property demand rises we have to ensure that we are attracting high quality developers to invest and bring new product to the market, whether they are new offices, retail development, warehousing or industrial space.
“We are fortunate that here in Kent, there are tremendous opportunities for those developers to deliver that space with support from local authorities, national Government and agencies such as ourselves.”
The event also saw KCC leader Paul Carter unveil conclusions from the Kent and Medway Growth and Infrastructure Framework (GIF), which has been developed in collaboration with Medway Council and the 12 district authorities.
The GIF highlights the significant growth anticipated in Kent over the next 16 years and identifies £6.74bn of infrastructure developments required to support it. It also recognises a funding gap of £2.01bn which, if not addressed will impede the county’s growth.
However, Kent County Council is taking action to address this and find innovative solutions, working with Medway and the Kent districts, Government, utility companies and private sector, engaging with Government and other partners, including private sector investors, to meet that significant funding gap.
Commenting on the GIF initiative, Paul Carter said: “The GIF is an incredibly exciting opportunity for us to set the terms of the agenda for infrastructure in Kent and Medway with Government and the private sector. It tells a sobering story about the challenge we face in delivering growth, but it also gives us a unique chance to do something about it.
“The growth challenge we face in Kent and Medway is significant – to deliver the approximately 160,000 homes and over 135,000 jobs that local authorities are planning across the area to 2031, there is a £6.74bn bill for infrastructure, of which £2bn is unfunded.
“The resulting infrastructure challenge is one that we face collectively across local authorities, the development industry, our communities and national Government.
“The solution to this challenge will not come from the public sector alone, nor can we simply expect to get all of this from the industry; rather we need real innovation in how we work with the private sector and Government to get the most out of the resources we have, whilst introducing new ways of leveraging funding and capturing value from development.
“With the GIF and our 10 point action plan, we will be working with industry, public sector and communities to create the best opportunity for quality communities across Kent and Medway into the future.”
Regional Director for the Royal Institution for Chartered Surveyors, South of England, Lynn Robinson said: “This report highlights the critical role that public sector intervention plays in unlocking property-led economic growth, with infrastructure an important tool to lever local investment. RICS is happy to endorse the report and its findings.”
The Kent Property Market Report is also supported by Cripps, DHA Planning, Kreston Reeves and RICS.
