Entering the last quarter of 2010, Senior Surveyor Marc Ballard believes we have reached an important period for our commercial property market.
As we enter the last quarter of 2010, in my view we reach a very important period for our commercial and industrial property markets. After the usually slow summer months I look forward with optimism to the autumn yielding increased activity and market confidence. The early signs are encouraging.
Forced sales have been limited in numbers, certainly compared to previous economic downturns and in Derby the churn of second hand stock has been maintained at reasonable levels. For developers willing to undertake refurbishment projects there have been rewards. Ivygrove Developments purchased the former Bemrose Booth facility on Nottingham Road in April for a modest price and after a period of refurbishment all 150,000 sq.ft. of the warehousing is either under offer or let at good rents.
The fact that this refurbishment scheme has been filled so promptly is in my view partly a result of the lack of alternatives in the market place. We are now at least two years into a period of limited or no speculative development. For companies seeking quality accommodation swiftly their options of built units are becoming few and far between. The outcome of this is that we are seeing rents harden and terms becoming less tenant friendly. On the freehold side, we recently completed the sale of a new 30,000 sq.ft warehouse at Victory Park on behalf of Revelan UK at over £75/sq.ft. A deal that would have not been out of place at the height of the market.
Couple the strong lease terms with excellent investment yields - we recently acquired a good quality industrial unit on Pride Park for a client off circa 7% - surely the combination is a signal for some well thought out speculative activity? Indeed, I think the market conditions are getting such for lowly geared developers to seriously consider it. The rest I guess is up to the banks... But that's another story.