A shortage of offices and industrial units in Worcestershire means continuing upwards pressure on prices throughout 2016, as demand for commercial property remains strong, according to one of the county’s leading commercial property agents.
John Dillon, Managing Director at commercial property consultancy GJS Dillon Limited, which has offices in Worcester and Bromsgrove, says that lack of available stock saw fewer deals completed in 2015, than in the previous two years, but demand for freehold offices of up to 10,000 sq ft, and for freehold industrial units of between 2,000 sq ft and 30,000 sq ft remains particularly high.
Mr Dillon says: “Recent changes to the SIPPs rules continue to make smaller freehold properties very attractive, as many company directors seek to purchase a property for their business through their pension schemes. Continuing low interest rates and the increasing willingness of the banks to lend also make them more affordable. All this means that for freehold owners it really is the best time to sell since the credit crunch.
“With the reduction in tax breaks and hike in stamp duty rates for residential investors, 2016 could also see increased interest in switching portfolios from residential to commercial property, placing further upwards pressure on demand and prices.
“However, as developers look to bring new schemes to the market, this situation will not last indefinitely,” warns Mr Dillon.
According to Co-Star, around 20 months’ supply of offices, at 659,481 sq ft, remains available in Worcestershire. However, only 145,085 sq ft of this stock is available freehold. The average annual total office take up for the past three years is just over 350,214 sq ft.
Only last month (December 2015) GJS Dillon Limited sold a 10,000 sq ft office building in Malvern to an un-named major local technology company for £1.4 million. This followed the sale of a 5,296 sq ft office building in Bromsgrove for use as a new children’s day care nursery for £625,000.
In November 2015, GJS Dillon acquired more than 7,500 sq ft of office space in Redditch, on a new 10 year lease at a rent of £8 per sq ft, on behalf of Beko Technologies, a major manufacturer and seller of compressed air systems, which relocated from Bromsgrove into larger premises.
According to Co-Star, at 3,898,522 sq ft, there is presently just over two and half years’ available stock of industrial units remaining in the county. However, only 1,044,771 sq ft of this stock is available freehold. The average annual total take up for the past three years is 1,360,985 sq ft.
Mr Dillon says that enquiries for freehold industrial units rose particularly strongly in the last three months of 2015, adding to the pressure on stock.
He says: “The quality of some available stock is not the best, which means that any properties approaching grade A are selling quickly. We were fortunate enough to take on the marketing of four industrial units, each of around 3,500 sq ft, in December, but we expect them to go under offer shortly, at an optimum price, as we already have strong interest from a range of prospective buyers.”
According to Mr Dillon, the leasehold market will also continue to be active, with businesses attracted by Worcestershire’s excellent communications, through easy access to the M5, M42, and M40, and to Birmingham, London and international airports, its flexible workforce, significant industry clusters, key lifestyle factors, and useful assistance from the LEP, County Council and other public sector bodies.
“With Worcestershire named only last November (2015) as the most productive LEP area in England, it’s no wonder businesses want to stay and grow, or relocate into the county,” says Mr Dillon.
