By Duncan Batty
Berrys
BERRYS has had a particularly busy period in the run up to the end of the financial year acting on behalf of various clients in selling, leasing or acquiring commercial properties.
The industrial and warehouse sector has, for many years, been the preference for property investment. In recent months, however, we have witnessed a noticeable increase in the level of enquiries for freehold office and retail investments. These enquiries have resulted in several investment sales where prices achieved reflect reduced yields against similar transactions in the market. In our opinion these improved capital prices are due to the retail and office sectors being seen as less risky than in the previous few years.
At the end of February, Berrys sold a multi-let investment on Towcester High Street. The property is arranged as six separate office suites with a large rear car park and frontage to Watling Street. The rent passing is £45,250 per annum exclusive and the price achieved reflected an initial yield of 6.79 per cent.
Also, a modern retail unit forming part of the Old Stratford Local Centre and adjacent to the junction of the A5 and A508 was sold off-market by Berrys reflecting an initial yield of 6.1 per cent. The property was let to local operator that had recently renewed their existing lease for a further term of six years from January 2020.
Outside of the county, Berrys sold a small retail unit on Stony Stratford High Street, which was subject to a new five-year lease at an annual rental of £15,000 per annum. This sale reflects an initial yield of 6.96 per cent.
In addition, we have experienced strong demand from tenants who have been given the opportunity to acquire their property but through the acquisition of the investment interest. Yields of below five per cent for both offices and second-hand industrial accommodation are not uncommon. However, the analysis of these transactions should not be based on the yield, but more the equated capital value. In particular, with new-build price increases over recent years, opportunities to acquire at levels which are still well below new-build prices but reflect increased second-hand values are well sought after by the owner occupier market.
In summary, whether you are a landlord, tenant or an owner occupier, the market has widened in its opportunity and, given the stock market’s reaction to the election result at the end of last year, the investor market is more than willing to acquire commercial investments as a secure home. Well located and good strong growth towns are particularly attractive. The transactions outlined highlight this and indeed show investors attitude to commercial property risk versus other types of investment risk.
If you wish to discuss any of your property enquiries or valuation requirements, contact Duncan Batty at Berrys on 01327 356148 or email