Stephen Salloway, Managing Director of Derby based Salloway Property Consultants, highlights that real estate has been a strong performer despite a 'disrupted' UK economy.
Been quite a year hasn't it? As Big Ben sounded at the start of 2016 I think only the most inebriated revelers would have been crazy enough to predict the events of the coming year. A Trump presidency-elect, Brexit victory in the Referendum, effectively a new UK government and a Leicester City Premier League Championship? Not on your life! But now it's the reality we live with. So, has the shock of the unexpected had a negative effect on the real estate market? In my experience of the East Midlands, the simple answer is no.
Despite a year of political turmoil which one might normally expect to fuel indecision, inertia and financial restraint - the property market has performed reasonably well. Of course there are a few anecdotes about deals falling through on the back of the Brexit news - but you wonder whether or not those deals were going to fall out of bed anyway and Brexit was just a handy excuse.
On the whole I think the Brexit vote has made little difference, principally because nothing has really happened yet. I was firm a 'remainer' but the Referendum mandate was clear, so let's get on with it. High Court action may be necessary to clarify procedure but it mustn't be used as a foil to create uncertainty about the vote. I also find it hard to believe that politicians and commentators are putting pressure on the Government to reveal its negotiating position.
I find this quite absurd. If I am selling a property with an asking price of a million pounds and somebody tells me they will pay the asking price but would like to negotiate a lower figure, I cannot conceive of a situation where I will not sell it at the asking price. Teresa May MUST keep her cards close to her chest!
It seems that the financial markets have already priced in the potential outcomes of Brexit, at least in terms of currency and exchange rates. The result is that UK real estate looks cheap at the moment and a weaker pound is driving exports. Consequently, there has been no real sign of negative impact on investor or occupier demand. Foreign investors have been alerted which will surely help to maintain a buoyant property investment market. It may also signal greater activity as far as inward investment is concerned.
Home-grown investment companies are seeing the provinces as offering better investment value than an overheated South East and I would expect that to continue. The recent £6m+ acquisition of the prime 3-acre investment site at Siddals Road by London-based real estate investment manager, Newcore, is evidence that Derby is fertile ground for investment.
Where occupier demands is concerned, the performance in the manufacturing sector has been particularly strong this year. The decision of SGS Engineering, the largest manufacturer of NitroLift gas struts in the UK, to expand into a new 65,000 sq.ft facility at Westside Park on Raynesway came at the height of Brexit uncertainty.
Earlier in the year, business service providers Irongate Group took 15,500 sq.ft to expand their operations at Kingsway Industrial Park and in May, NHS Foundation Trust took 46,000 sq.ft of refurbished warehouse space on Gosforth Road.
Other 'chunky' industrial and warehouse deals include the new 50,000 sq.ft. steel production facility being built on Alfreton Road for S Robinson and the largest of them all is the distribution warehouse facility on Derby Commercial Park which was let to Ted Baker a few months ago. Indeed, I am aware of two other significant transactions on the cards for contractual completion prior to Christmas so all in all, occupier demand looks to be quite healthy.
With a continued shortage of quality existing stock, this level of demand is good news for the likes of Infinity Park Derby and other development projects emerging in our city. I would certainly expect to see the first new buildings at IPD during 2017.
Another reason for optimism going into the New Year is the decision to drive forward with HS2 through our area. Whilst the true economic impacts of this won't be felt for years to come, it gives our market a new anchor for potential commercial development around the planned interchange, which in turn should encourage greater collaboration between administrations both sides of the M1 in an ever devolving landscape.
On the whole, I expect commercial and industrial property to continue its steady improvement in 2017. Of course, once Article 50 is triggered and exit negotiations progress, there is bound to be uncertainty. But we have a resilient, sophisticated economy and out of change normally comes opportunity. So Derby, as the UK Capital for Innovation, should be well prepared to take advantage.
This year you've been kind enough to read my views on devolution and the planning system and I think these will continue to be defining topics in 2017. So, in concluding, I'd remind the powers that be that we must continue to find ways to stop regulation and bureaucracy from frustrating development and regeneration. Smoothing and speeding up the process has to be fundamental to continued economic growth. With that in mind, all that's left to do is to wish the readers a very Merry Christmas and a happy, healthy and prosperous New Year.