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Preview of The 2012 Commercial Property Market in the M27 / M3 Corridors

Preview of The 2012 Commercial Property Market in the M27 / M3 Corridors2012 will be a year of improving fortunes for the commercial property markets in the M3/M27 corridors, as demand and confidence in the local economy increases during the year.

There can be no doubt that market conditions will remain tough, but there are grounds for optimism, as the UK embraces the positivity of Olympic and National celebrations. For example, market activity within our region increased over the last twelve months with the take-up of industrial/warehousing space increasing by 10% and business space/office take-up rising by a staggering 83% over 2010 levels!  Many well established companies have been expanding within our region such as Fluor moving into their new 210,000 sq ft HQ at Farnborough Business Park, Raymarine taking 63,000 sq ft of offices and R&D space at Segensworth and the Co-op opening their new Southern England distribution centre at Andover Business Park.  There are also many other examples of locally based companies,  (Magma Global, Blatchfords, Computer 2000,Genesys Telecom........) investing in the M3/M27 property markets and taking advantage of competitive terms whilst they last.

2012 will also see continuing progress on major redevelopment proposals across the region with several development partners now appointed to move forward projects such as the regeneration of Basing View in Basingstoke (Muse Developments), the Walworth Business Park in Andover (Kier Property) and the Cultural Quarter in Southampton (Grosvenor Developments).These initiatives, together with many other important schemes, such as IQ Farnborough and Landid/Delancey’s Sun Park Campus will be at the vanguard of commercial property in our region, creating new business environments that meet the operational and ethical requirements of today’s companies.

The promotion of business and development in our region will also be assisted by active roles being taken by the Solent and M3 Local Enterprise Partnerships (now with total initial funding of approximately £26million) and the Government’s new National Planning Policy Framework, due to be finalised during 2012 and creating a general presumption in favour of sustainable development.

In 2012, the industrial and warehouse property sector across our region will continue to perform steadily, particularly in relation to modern stock, with the shortage of available space maintaining Grade A rental levels at between £9 per sq ft within the upper M3 corridor and £7.50 per sq ft in Southampton.

The office market is likely to see little change despite the improved take-up during 2011 and given the overall surplus of available space within the region.  Grade A rents will remain at a headline level of between £18 - £20 per sq ft, with niche markets such as Winchester City Centre attracting the highest rents in the short term.

Town centre retail markets will remain under pressure during 2012, particularly in secondary areas.  This will in turn squeeze retail rents in most of our centres, with Winchester once more being the exception due to the limited supply of available prime units. Action is clearly needed to support many high street locations and it will be interesting to see if the Government accepts the recommendations set out in the recent Mary Portas Report.

The investment market within our region is likely to remain polarised with strong demand for well let prime opportunities and many secondary propositions still only able to achieve double digit yields.  Ongoing restrictive bank lending and general market sentiment are unlikely to change this scenario during 2012 , at least in the short term

Overall, 2012 will be a tough but successful year for the commercial property market in the M3/M27 corridors as local businesses concentrate on their own markets and achievements against the wider and more uncertain macro-economic backdrop.  It will be very much a year for focusing on the positives, celebrating successes, (including hopefully many Olympic medals) and of course taking the right specialist regional property advice!

Posted by The Editor (wantspacegotspace) on 18th January 2012 (updated 09/04/2013)

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