UK COMMERCIAL PROPERTY MONITORECONOMICS
Simon Tuddenham, London, Lipton Rogers Developments,
tuddenham@liptonrogers.com - Market is near the bottom and
rents we expect to continue to grow as schemes will simply not be
deliverable, while capital values we expect to pick up by the end of
next year as interest rates start to drop.
Simon Wainwright, London, JPW Real Estate, sw@jpwrealestate.
co.uk - Market polarisation is clearly apparent with demand focused
on best assets, whilst for others there is little or no demand.
Construction cost increases have moderated but development
fi nance has become harder with several lenders withdrawing from
the market. Central London offi ce demand holding up well with
plenty of activity.
Stuart Beevor, London, Beevor Consulting Ltd, stuart.beevor@
yahoo.co.uk - Interest rates are falling in response to lower infl ation,
but the economy remains sluggish. Occupiers will demand best
quality space and the bifurcation of property between demand
for best and worst quality will continue. Investors will follow
accordlingly.
Tim Butler, London, South Kensington Estates, tbutler@ske.org -
Market is warming up - optimistic.
Tim Edghill, London, Space Asset Services Limited, tedghill@
spacedevelopments.org.uk - Q4 has felt relatively fl at and paused as
investors wait to see better value in the market. Recent economic
data will add confi dence that we are at the bottom, but recessionary
markers will quell this turning into any form of signifi cant uptick in
Q1 activity next year. There is a market sentiment that more distress
is on the way and capital will in the main remain cautious.
Tony Parrack, London, TP Consult, tonyparrack@tpconsult.co.uk -
There is still a noticeable shortage of larger fl oors (say 10-20k plus)
in core West End locations which were typically Mayfair and St
James’s. As a result, adjacent areas such as Soho and Marylebone
which were already popular are seeing great levels of demand and
rental increase. At the top end, requirements for ‘green’ buildings
is a given, at the bottom end the cost is paramount. We need, as an
Industry, to diff erentiate between ESG and green - they are far apart
and quite diff erent issues.
Tristram Frost, London And Western Europe, Atlas Property Advisors
Limited, twtfrost@googlemail.com - Probably nearing the bottom
of the current cycle thought not quite there yet...unless there are
more Black Swan events. Diff erent countries across Europe seem to
be in slightly diff erent phases. Many leading investors are out of the
markets untill possibly Q2 2024.
William Spencer, London, Vectis Property Group, william_spencer@
live.com - Distressed buyers looking to reduce overall debt is
starting to fl ood the market in all sectors.
Wlliam Nicol-Gent, South West London, Killochan & Co, louanna@
blueyonder.co.uk - Uncertainty prevails, the “excess” of “Health
outlets” is probably unsustainable. The eff ect (& complexity) of
Net Zero demands has yet to impact on Residential assessed
below B and D but will - severely - damage (undermine) occupancy
compliance.
North East
Alison Wright, Leeds, EY, alison.wright@uk.ey.com - Challenging due
to cost of debt fi nance but early shoots evident.
Barry Nelson, Newcastle Upon Tyne, Northern Trust Company
Limited, barrynelson@northerntrust.co.uk - The rental market
for smaller secondary offi ces remains challenging with enquiries
sporadic and take up of space slow. The smaller unit industrial
rental market within the north east is still achieving a good level of
enquiries and conversion rates to lettings are holding up, despite
the continuing economic backdrop of higher interest rates, high
power costs and supply chain price increases.
Nick Pemberton, London, Allsop LLP, nick.pemberton@allsop.co.uk
- Central London commercial investment volumes are likely to fi nish
the year at £6.0Bn – with long term average annual volumes around
£15Bn. This is even slightly lower than the 2009 GFC Central london
volumes - this time around we have buyers and we have sellers,
but the bid ask spread is still too wide, causing the historic low in
market volumes. Sellers are not yet refl ecting the rapid change in
the cost of debt into their pricing and buyers are extremely cautious,
particularly £50M+ lot size.
Nigel Biggs, London, CBRE, nb@nigelbiggs.co.uk - Conditions are
now right for some well priced purchasing.
Nigel Harrison, London, harrison leggett, nh@harrisonleggett.
co.uk - Prime offi ces remain in short supply and are generating ever
increasing levels of rent. Secondary offi ces continue to experience
lack of demand across Central London. The fl exi offi ce market is
reaching saturation point in my opinion.
Omur Payne, London, Day and Bell Surveyors Ltd, omur.payne@
dayandbell.co.uk - We have mix portfolio in/around London, and
in Devon. We have a large portfolio of secondary retail parades/
neighbourhood centres. We focus on tenant mix being right. We
have hardly any vacant units, and rents increased approx 20%
over the last 3 years. Industrial similar. Offi ces attractive for resi
developers, all our offi ces occupied. We are buying more sites
through development funding agreements. We work bridging the
gap between the landlords and tenants. Hope to see more of that
happening.
Phil Weller, London, Gerald Eve LLP, pweller@geraldeve.com - I
advise occupier clients across the UK with a recent focus in central
London offi ces. The most recent transaction I have advised on was a
90,000 sqft offi ce subletting in Stratford. I think there are diverging
rent and incentive packages between prime/secondary stock which
is being accentuated by signifi cant capex requirements required to
reach sustainability targets on secondary stock.
Professor Graham F Chase, London, Chase Sinclair Clark LLP, gfc@
chasesinclairclark.co.uk - Global events creating uncertainty with
fl ight to security and few good quality properties becoming available
but an increase in secondary and non compliant with environmental
criteria space. Much of the development market is struggling with
signifi cant increases in cost of materials with viability often diffi cult
to secure. Even though headline infl ation is falling, the increases in
the pricing of raw materials over the last 2 years has outstripped
property returns and CVs.
Robert Bath, London, QUadrin Valuations Ltd, rbath@ipva.com.
au - Overall a reduction in asset values in the lower end of the price
spectrum due to increasing interest rates erroding real income
values and a continuation of the decline in confi dence for UK assets
due to the removal of the UK from the EU.
Rod Bowers, London, Wimbledon Exclusive, realapps2016@gmail.
com - Stubborn supply side constraints obstructing fair price
discovery.
Rodney Eborn, Romford, Retired, rodneyeborn654@gmail.com - The
market is making downward adjustments to refl ect current cost of
interest rates/borrowing and infl ation.
Russell Francis, London, Colliers International, russell.francis@
btinternet.com - The probable peak in interest rates and the
medium hope for economic recovery and hence rental increases is
starting to have a positive impact but it is tentative at the moment.
S P Dempsey, London, Boultbee LDN Capital Ltd, sean@boultbeeldn.
co.uk - Expectations of the beginning of a recovery in both the
occupational and investment markets, across most sectors and
at some point in late 2024 or early 2025, are now more openly
discussed. A continued return to offi ce occupation, reducing energy
costs, stabilised interest rates, an end to the confl ict in the Middle
East, and an improvement in funding availability could do it.