A review of take up in the commercial property market over the past 12 months demonstrates that 2014 showed consistent signs of improvement across all sectors, building on the return to a confidence in the market which we first saw emerge in the autumn of 2013. Despite a ‘lifting off of the throttle’ in the fourth quarter of 2014 there still appears to be a growing confidence from both small and large business occupiers that the economy has turned the corner.
The first half of 2013 saw a noticeable move towards a reduction in the level of incentives being offered to prospective tenants and those occupiers looking to purchase property on a freehold basis were faced with a fast dwindling supply of opportunities. Where freeholds were available those looking to sell were clearly looking to capitalise on a hardening market and ‘fire sales’ quickly became a thing of the past. If the market confidence seen last year continues in 2015 then rental growth will be a real prospect for the first time in six or seven years.
We have reported previously about the increase in activity in the office market in Daventry but it is worth repeating again here as further evidence of occupier demand during 2013 in a town where the office sector was particularly badly hit during the recession. One of the highlights of the year for Drake Commercial in Daventry was the sale of a detached 6,007 sq ft office building on Heartlands known as Genoa House and sold early in 2013 to Langley Ltd. Northampton town centre offices were also hit hard as the economy dived and while an analysis of office take up last year would be skewed by a number of buildings being converted to alternative uses such as residential, office occupier demand has definitely returned. An example of this growing confidence is the 5,500 sq ft of lettings that we achieved last year alone in Charles House on Derngate in Northampton town centre. At the end of last year the building was fully occupied for the first time since pre-recession days.
We predict that this improved confidence will continue into 2015 and as the lack of good quality stock really starts to bite we should see market evidence of rental growth. With this in mind a number of key developers have reacted to this rebalancing of the market. Drake Commercial have been advising Stepnell on their at OGEE Business Park on Finedon Road Estate in Wellingborough and the first months of 2015 should see them back on site with the construction of a new 13,000 freehold warehouse and office facility for a local occupier which again is the first real activity since the recession hit.
With investment property already in Northampton our clients Hamdon Gate developments have also been successful at their J1 development in Rugby which is strategically positioned in what is known as The Golden Triangle, close to the intersection of the M6 and M1. During 2013 we completed a pre-let to Automotive Insulations on a new 60,000 sq ft building and the end of 2013 saw us close to completion on the constructions of a further 100,000 sq ft unit which has been pre-let to Kelway. More development is likely in 2015 with planning consent for a further 150,000 sq ft already granted.
There will inevitably be jitters around the financial markets in the run up to the general election in May. It is impossible to predict how this will impact of the commercial and residential markets but assuming there are no nasty surprises then we should see 2015 continue in the same vein as 2014. Then again, when have politics ever been predictable!