WITH the new year upon us, it's a good time to look back at what has happened in the Northampton office market over the last 12 months.
The good news is that there is a discernible change for the better, a feeling of improved confidence in the local market with stronger demand for both leasehold and freehold options, which in the last 3 - 6 months has seen a real surge in freehold property enquires. With this increased demand and deals being completed the cogs that drive the market are starting to turn once more.
With Rental values increasing in line with levels of demand and rents for existing leasehold options at circa £15psf for refurbished stock it all looks very promising, combined with the ability for rental growth into 2016. This can continue to be driven with the fact that a number of buildings are set to return to the market next year. Values are still look set to increase, but this is still tempered by the limited number of options in the market place. Capital values will continue to improve and we will hopefully get to the pre -recession values of circa £200psf. Of course this is tempered by the number of freehold and leasehold transactions that will take place during the coming months, but the future is looking promising. This improvement and feeling of confidence will ultimately filter down onto developers but in order for development to commence the commercial banking sector will have to ultimately finance some of these schemes which as we all know still provides a huge hurdle to overcome
With a number of significant leasehold deals close to completion and the ever closer onset of new office development commencing, the fist for over 10 years there is a lot to be confident and joyous about. However the only down side is the continued lack of stock which does stymie the growth of the Northampton market, with confidence returning and occupier appetite for better quality buildings look set to continue the future does look a lot brighter than it did 2 years ago.
This return of confidence will continue to grow at a steady pace which is going to be sustainable in the current market. Issues remain for occupiers and landlords alike, such as the ever present business rates liability. For vacant or part vacant properties rates liability still creates some serious issues over income streams and cash flow. However with rates mitigations schemes in place there are ways to mitigate such liabilities.
All in all 2015 has been buoyant and the recovery continues, 2016 should be defined by rental and capital value growth which will be generated by refurbished stock coming to the market and the commencement of design and build opportunities in Northampton along with stronger occupier activity driving the market.
For any queries or questions concerning the Northamptonshire office market please do not hesitate to call David Grove on 01604 664366 or email firstname.lastname@example.org