Commercial Property Market is Getting Stronger by the Day, Says NG Chartered Surveyors
8th August 2013
Jonathon Seddon, of NG Chartered Surveyors, says that the commercial property market is beginning to show encouraging signs of improvement after a difficult period, but he still has concerns about the health of the city centre market.
At NG Chartered Surveyors, we’re all noticing real signs of improvement across the property sector as ‘doom and gloom’ stories on the economy in the media have started to recede and investors and occupiers have become more confident.
We’ve noticed that there are less people window shopping and more people who are genuinely looking to buy or rent properties as they start making concrete plans for the future.
In the residential market, there has been a resurgence of new developments from house builders, and demand for residential mortgages is on the up.
In the commercial market, we are seeing a growing improvement in both rental and capital values within the industrial sector, particularly on modern stock – which is in short supply – or well-located properties.
Interestingly, mortgage lenders have not kept up with the increasingly strong demand for properties and the price that buyers are willing to pay. In the last couple of months, we have twice experienced a situation whereby a purchaser has agreed to pay more for a property than their mortgage lender sees fit. This is a real challenge for buyers in a market where prices are rising quickly, as lenders base estimates on historic evidence that isn’t always fresh.
What does concerns me is the city centre office market. It’s not necessarily that the demand isn’t there, but that the quality of stock is not up to scratch. When we’ve marketed modern offices they’ve been snapped up. Another problem for the centre is the Workplace Parking Levy, which was imposed in April this year.
The levy has had a devastating impact on the city centre. Lots of companies are telling us they won’t consider office space within the levy area to avoid paying the tax – which means companies with 11 spaces or more must pay £334 a year per parking space. This is unaffordable for small businesses and so we are seeing fewer and fewer office workers in the city centre, which I think will start to have a knock-on effect on the many cafes and shops that people visit on their lunch breaks.
The levy is one of the reasons we’ve seen greater interest in office buildings along the motorway corridor, where office space in typically more modern and has a much greater, untaxed parking provision.
In general though, I’m pleased with what we’re seeing in the commercial property market, which is getting stronger by the day. I think the improvements we’ve seen are a really positive sign for the future.