Industrial and investment moves dominated the commercial property market in the Eastern region in 2019, with other sectors holding their own to a greater or lesser extent.
That, in summary, is the experience of the past twelve months by leading chartered surveyors and commercial property experts, Barker Storey Matthews – whose own business offering was boosted this year (2019) by becoming part of Eddisons.
In reviewing the activities of its agency office locations’ reach across the Eastern region – from Peterborough, Huntingdon, Cambridge and Bury St Edmunds – Barker Storey Matthews points to the leading role the industrial sector, in which logistics sit, has played in being fuelled by good occupier demand as well as investor appetite. Once again, the industrial sector is the market sector in which investors, seeking freehold opportunities, have focused their attentions in 2019.
To date (November 2019), deals concluded with occupiers by its agency operation this year are similar in number to 2018. However, its agents share a view that the anticipation of BREXIT has put the brakes on some occupiers’ moves. This has affected the volume of deals which, this year, would have exceeded last year in transactional terms.
While many occupiers were reluctant to cite BREXIT as an explicit reason to abort a move, it has been – and looks set to remain – an influence on some business occupiers’ decision making process. However, BREXIT – in all its spectral forms – has been less of a presence for investors in the Eastern region as whole but, particularly, in the Peterborough and Cambridge-influenced markets on whose attention indigenous and overseas investors have been focused.
The chorus of high street chain failures has dwindled retail property fortunes. Across the piece, this sector continued to underperform, yet with the odd exception in the right location in Barker Storey Matthews’ experience.
In general, the office market has turned in a ‘patchy’ performance – in part, but not wholly, due to shifting patterns of work. Lack of supply of available quality office stock remains an ongoing issue too, alongside development costs.
The experience of the micro-markets of Barker Storey Matthews’ individual agency teams reflected the wider regional picture, with the odd exception attributable to the particular characteristics of any one micro-market in a specific location.
For instance, the collapse of Thomas Cook in September (2019) will see the Peterborough office market influenced by 105,000 sq ft of headquarters office building as a dominant and one-off instruction when it comes to the market shortly.
Also, Peterborough has bucked the retail trend with vacancy rates well below the national average again in 2019. Barker Storey Matthews noted that just five per cent of the city centre’s retail property stock was vacant, set against the national average rate of circa ten per cent in the autumn. Retail remains buoyant enough in Bury St Edmunds, led by the smaller units and independent occupiers, where a number of larger units remain vacant in the Suffolk town.
The office, R&D and laboratory markets always characterise moves in Cambridge and this year has been no different. The focus has been on the city’s traditional science park campuses where typical R&D lettings sizes are between 5,000 to 15,000 sq ft. Significant R&D lettings at the Cambridge Science Park have concluded in the third quarter of the year and new leases have been signed by key players at Granta Park. There has been notable take-up at the city’s other significant southern fringe campuses, Babraham Research Park and Chesterford Research Park.
Office occupiers’ focus has centred, once again, on the Station Road area which is rapidly developing out and filling up. International corporates dominate there and are paying prime rents per square foot for the privilege of such a desirable location and high profile, blue chip neighbours.
For Barker Storey Matthews, the significance of the A14 upgrade on the commercial property market in the Cambridge to Huntingdon corridor cannot be overstated and its positive influence is rippling out to what were once secondary locations.
Huntingdon is second only to Peterborough in the agent’s operational areas for being an industrial hub and this extends to the market towns of St Neots and St Ives as locations who have benefitted from ‘the A14 upgrade effect’ this past year.
Occupiers follow in the footsteps where investors have already trodden and speculative phases of new build developments at Eagle Business Park in Yaxley and Lakes Business Park in St Ives have built out this year, with occupiers in situ at the year’s end. Many having relocated from older, poorer quality industrial, trade or showroom stock which no longer met their requirements. In a similar vein, construction of a speculative scheme, Woodlands Estate in Biggleswade, got underway this autumn.
Road transport connectivity being key to these new developments’ success.
With the Ellington to Swavesey stretch of the A14 set to open on 09 December (2019), the engineering focus is already shifting to the local roads serving the villages, ahead of the whole infrastructure project’s completion next year (2020).
The much improved A14 sees agents’ eyes focused on the potential for new market sector profiles in the Cambridge to Huntingdon corridor. This spine now affords the opportunity to attract a genre of business occupier – such as scientific and technology R&D or high profile office operators – who, historically, may have looked to Cambridge and its satellite business parks, more than to Huntingdon, to satisfy their property requirements.
In summarising Barker Storey Matthews’ 2019 market view and looking ahead to the coming twelve months, Stephen Hawkins, Partner at Eddisons, said, “At this time last year, we said that 2019 was going to be a bit of rollercoaster – and, on a macro-level, we weren’t wrong.
“However, we also affirmed our view that the fundamentals for a sound commercial property market remained and this has been the case in the Eastern region.
“This view endures as we face 2020, in spite of the same economic and geopolitical forces set to still be in play in the coming year as much as they have been in the past twelve months.
“While no agent will admit to having a perfect 2020 vision, we’ll surely all agree that the steadiness of an investment in bricks and mortar retains its long term investment appeal – no matter how much of another rollercoaster ride the month to month experience of the coming year is sure to be.”
