Home    //    News    //    Struggling to find commercial property?
Struggling to find commercial property?

Struggling to find commercial property?

1st February 2016

During the first weeks of 2016, it has become apparent that the supply of commercial property is failing to meet the demand.  Sibley Pares has a list of keen applicants looking for offices, warehouse and shops and the supply in Maidstone and across Kent is just not able to meet the demand! 

Why is this?  

There is no simple answer; there are numerous causes and no simple solution.

  • Changes in Planning, with permitted development rights allowing conversion of offices to residential premises, coincided with the upturn in the residential market.  This resulted in many offices being lost to the commercial market in favour of creating town centre homes.  This has restricted local supply, with in some cases office users being forced to move to alternative premises.

 

  • The upturn in the economy has creating a greater demand for office space with home office workers expanding and needing to move back into office accommodation and that has all added to the squeeze on local space.  The economy has improved which is great news, however the need to overload surplus space has diminished, business failures and forfeitures have decreased and growing businesses need more space, putting pressure on the existing stock.

 

  • Developers are still nervous about building without a tenant lined up.  The threat of empty rates tax liability even with the vacancies schemes available to minimise this, still feels like the ‘Sword of Damocles’, hanging above their heads.  Build costs have risen and with increased and more stringent build criteria and in spite of the shortage of stock capital values have not risen everywhere to the extent to make schemes viable.  For example with a design and build of £100 psf and resale of £120 - £140 psf once the finance land values and profit are factored in new warehouse builds are still not viable in many areas throughout Kent.

 

  • Kent “The Garden of England” is crowded.  We lack space to build, with pressure from housing and homes, competition for land is keen and housing will produce higher values and such schemes are currently looked upon favourable by Planning and considered preferred neighbours for many.  The opposition to KIG was a classic example of this.  This is also to the detriment of commercial development.  This collectively means supply is restricted and with no imminent signs of it changing.


As things stand nothing looks to alter immediately, so we must assume the situation will not improve in the short term and may get worse so what needs to happen?

Sibley Pares believe empty rates relief needs to be reintroduced to support builders prepared to construct good quality commercial property but who want an asset to sell or let not a liability during the disposal process.

Planners need to work with the construction industry rather than hinder them and the public need to recognise the need for industry and places to work rather than objecting to every scheme that is brought to the table – industry equals jobs, equals growth and increased wealth for the whole area - ‘nimbyism’ hinders development.

Eventually values will increase to an extent that they will tip schemes into viability and the developers will build to meet the demand.  Sibley Pares recommend, if you are looking to expand or move, give yourself plenty of time.   Register with local agents and if necessary retain an agent to do the leg work for you.