Robert Diggle of Edward Symmons Provides His View Of the North West commercial property Market

The last quarter of 2011 and first month of 2012 have continued to demonstrate a mixed market for the North West commercial property sector.

While there is strong demand within certain sub-sectors, we are finding that potential purchasers are more concerned with finding “good deals” in what is widely known to be a challenging economy. There are certainly plenty of cash-rich individuals out there, many of whom are not affected by the marked deficit of available finance, and these individuals are attempting to seek out “bargains”! In reality, given there are sufficient numbers of potential buyers with similar ambitions, the market’s natural supply and demand balance has levelled and more desirable properties are now changing hands at a relatively competitive price point.

So far so good. But this positivity is not reflected across the board. For certain property types, such as large former factory premises, the market is flailing: there is almost no demand from owner/occupiers or tenants where low eaves make them unsuitable for storage and modern logistics purposes. The net result is a considerable reduction in transactional value for these units, where sales are only being reached in distressed cases with property speculators buying up at a reduced rate for long term gain.

When it comes to development, part built sites, both residential and commercial, are proving popular provided that the monetary outlay to finish is limited and they become income-producing for the investor fairly readily. Comparatively, sites with planning but where construction has not started are failing to attract investment because of that lack of available development funding I referred to earlier. In response, the LPA receivership team at Edward Symmons is leading a growing trend to oversee work-out on such sites before seeking a buyer, to ensure maximum returns for creditors.

The North West rental story paints a similarly varied picture. Here it would seem that good things come in small packages, as new build estates and smaller storage workshops remain in demand, commanding levels of rent close to those achieved pre-recession! Modern warehouses in established, well connected locations are also prompting multiple enquiries and competitive rents, offering a boost to the overall rental sector. But age is the stumbling block again, with out-of-date layouts and troublesome transport connections leaving many older units sitting empty, racking up rates bills for the landlord!

In general, the number of enquiries has increased in the past six months, which is promising without question. However, this selective optimism must be put in context, as landlords are offering significant discounts disguised as rent free periods to help deals along. There is no doubt in anyone’s mind that it’s a tough market on a national scale, but the North West is performing as well as many of the other UK regions. So for now, we should focus on the sub-sectors that are holding up and keep transactions going to bolster confidence; this activity may well prompt a return to widespread competitive values in time.

Posted by The Editor (wantspacegotspace) on 1st February 2012 (updated 07/02/2012)

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