By Simon Parsons
LAST year saw a strong and buoyant market with the industrial and warehouse sector outperforming most other markets. Alternative commercial markets, including the hotel and student accommodation sectors, also performed well, especially from increased foreign investment.
Northamptonshire benefited from its strategic location within the UK and connectivity to the rest of the UK. Industrial and warehouse serviced land values increased, underpinned by strong rental and capital growth. Whilst we continued to experience increased development costs, economies of scale that could be realised by larger warehouse development provided various examples of speculative development across the county.
As a result of investor demand and the lack of opportunities in the industrial and warehouse sector, non-institutional investors sought alternative, including that of the office sector. The lack of development within the sector has improved capital prices, whilst rental growth has increased for modern accommodation. Occupiers expressed concerns about the availability of labour and requirements for modern office accommodation, an area of concern across all markets, and identified within economic reports at the end of the year.
The retail sector suffered from a lack of investor appetite and an increase in vacancy rates. This was particularly relevant in the High Street, where occupational costs rose amongst challenging retailing conditions.
Brexit continues to have an effect on business and investment decisions. Despite this political and economic uncertainty, the industrial/warehouse sector showed growth in overall transactions and encouraging growth in sub-sectors such as the food and drink industry. The sector as a whole continues to position itself towards changes in consumer behaviour and the increase in online retailing and the need for warehousing. Demand for both ambient, chilled and external storage were noted within the industry.
Coupled with the increase in sales of electric vehicles and demand for charging locations, requirements for smaller sites to accommodate strong demand from coffee and fast-food outlets provides an attractive alternative to that of the industrial sector. The roadside market is expected to continue much as it did in 2018.
With capital values given a boost in 2018, and the need for many companies to invest into longer term strategies, opportunities for sale and leaseback will increase.
Our commercial agency and investment team are able to offer advice as to opportunities for companies to release equity without the need to increase debt financing and we would be delighted to assist you in your corporate strategy.
If you are interested in the opportunities identified, contact Simon Parsons, BSc (Hons) MRICS on 01536 213169 or 07711 042330.