Lincoln’s commercial property sector looks set for a prosperous new year with new developments underway and investors targeting the region, according to national property consultancy Lambert Smith Hampton (LSH).
Sam Elkington, head of office at LSH in Lincoln, said there is a renewed sense of optimism in the city, which is showing signs of a sustainable market across the commercial property sector.
“The effects of the 2008 recession are now well behind us, but the market is still recovering and the prospects are very encouraging,” he said.
“Although they are unlikely to reach the dizzy heights of nearly 10 years ago, it feels as though the market that we have is very sustainable and, hopefully, here to stay. There are more cranes appearing on the Lincoln horizon, which has been a long time coming.”
He said record low interest rates on borrowing and cautious lending by banks and the financial institutions has created a robust market.
“Where 6% yields and below on commercial property investments were historically only seen in prime retail locations in city centres, they are now becoming the norm in a variety of investment sectors,” explained Sam.
He said the trend towards convenience food stores in village and neighbourhood locations has resulted in those properties becoming desirable for investors, with the Lincoln LSH office handling eight transactions in the past 12 months for both private investors or the recently created Lincoln Property Syndicate. Sam said transactions such as these tend to provide secure income for 10-15 years, based around the national covenant with fixed growth on rent reviews.
There is also strong demand for freehold properties by businesses that want to expand or relocate and although construction margins on these properties remain tight, it is a sign of the competitiveness in all sectors.
And new industrial developments of individual workshop units offer the opportunity for businesses to own their own premises for less than the price of an old terraced house, added Sam.
“These typical situations have helped to create a strong, very sustainable market,” he continued. “With the lending institutions being cautious with their borrowing, usually no more than 60% of the market value, one feels confident going forward.”
The Brexit vote created a two-month period of inertia in both the local and national market, but there has been a cautious return to trading by both investors and owner-occupiers.
Residential developments, highlighted in the Local Plan, are also helping to bring further stability in the market, with the LSH Lincoln team trading more than 1,000 building plots in the last 18 months to developers.
