27/7/20 – Commercial property market sees encouraging activity levels

At the moment the outlook for the commercial property market is still highly uncertain but there are indications from what is occurring as to what may transpire.

Matt Bowen, Director in Aitchison Raffety’s Commercial Agency division, comments, “Generally, we are seeing considerable interest in freehold purchases of all commercial property types from owner occupiers. This is likely spurred on by the low cost of borrowing at present and the uncertainty of other forms of investment. For lettings, the demand is almost entirely from small to medium sized firms with many larger corporations seemingly not yet in a position to know their property needs going forward. This means that current interest from tenants is mainly focussed on premises across all property types with rental values of less than £50,000 per annum.”

“The restaurant and take away market is currently by far the busiest sector with substantial numbers of enquiries for premises we have available. We have recently placed a number of transactions into solicitor’s hands and we have a number of properties with multiple offers that will follow shortly. More stock is likely to come onto the market over the coming months although it would appear with recent government incentives this sector of the market may yet have a speedier recovery than originally feared. Leisure uses are also being unlocked with gyms set to open at the end of this month. Interestingly hardly any gyms or leisure use properties have come onto the market so far.”

“The office market is starting to see more enquiries and whilst focussed at below 2,000 sq ft some of the slightly larger businesses are now beginning to consider their space needs as recover begins. The trend so far has very much been one of downsizing and the market is anticipated to be quite busy in the next quarter as a lot of companies consider moving from their existing premises to ones of the appropriate size for the firm now. A great deal of uncertainty exists but as employees come back from furlough during July and August we believe a greater understanding of space needs will develop. We are not seeing rent reductions being agreed on transactions but if availability levels increase we could see a softening of rents. In the Home Counties there is continued interest from companies currently accommodated in London who are looking to move out.”

“Industrial remains a market with little stock and steady demand. Rents have remained at pre Covid levels and where there is a shortage of availability we anticipate rents may well increase. Where some smaller businesses have struggled during the crisis we have received new instructions to market their premises but overall, it remains a low volume market with limited supply.”

“Activity levels across the markets are encouraging and there are positive signs within the Home Counties market. The future impacts of Covid, Brexit and recession in the UK economy remain and as recovery continues it will be interesting to see how the activity levels develop. Brexit led to many people and companies delaying making property decisions. In the current crisis not making a decision soon enough could be fatal to the future of a business!”

For further information, please contact Matt Bowen at matthew.bowen@argroup.co.uk.