Record year for Nottingham investment – but office supply drops by a fifth
A annual review published by commercial property agency Innes England has revealed Nottingham benefited from £510m of investment activity in 2017 – the highest level recorded in 11 years.
The 11th Market Insite report – which monitors trends in the regional property market focusing on Nottingham, Derby and Leicester – also identified increased take-up across office, industrial and retail, in line with an increase in rental values.
In Nottingham, the 2017 report also highlights:
– Rental increases were recorded across office, industrial and retail sectors
– Deals struck with HomeServe, Framework Housing and Siemens helped to bolster the city’s office transactions
– Take-up in the industrial sector rose 24% year on year
– Office supply is 20% lower than 2016
Craig Straw, director at Innes England, said: “In the last year, Nottingham has benefited from a boost across all sectors. Investment levels have reached the highest point recorded over the last decade which is great news for the city.
“Leisure, student accommodation and the emerging PRS (private rented sector) have been key contributors to this growth and highlight the renewed confidence from investment funds willing to capitalise on opportunities in the regions.
“Activity at the larger end of the size range, which had been absent the year before, helped to boost the office take up figures. HomeServe and Siemens found new out-of-town premises for their new regional offices while Framework Housing secured a new city-centre HQ. Take up was often not replaced with new supply and by the end of the year supply was down 20%. This market imbalance fed through to rental inflation with prime rental growth being experienced for the first time in a number of years.
“Prime retail rates have jumped on both High Street and out-of-town units; intu Victoria Centre and Giltbrook Retail Park continue to dominate the sector. Major brands such as The Range, Wilkos and B&M have opened new stores in the region, supported by the emergence of several new car show rooms for Ford, Mazda and Aston Martin.”
Ben Taylor, retail director at Innes England, added: “One of the biggest deals struck in the retail sector this year was the sale of the building in Old Market Square currently occupied by Debenhams. The 196,604 sq ft premises was acquired by Altum Capital in a £25.8 million deal.
“Rental rates at intu Victoria Centre reached a record high of £275 per sq ft. There was some movement in occupiers leaving and new tenants moving into the centre, with High Street retailers including Vodafone, Joules and Fat Face all relocating within the last year.”
In the industrial sector, take-up rose 24% year on year driven by large acquisitions in the logistics sector from the likes of Kuehne + Nagel and Cync UK. Replacement supply was often absent and availability continued to tighten with the market now only providing around ten months of supply based on average take-up levels. These market dynamics fed through to drive prime rents which rose to £6.25 per sq ft, exceeding the peak recorded in 2008.
Matt Hannah, head of agency for Innes England, added: “Overall the picture in Nottingham is very good but limited city-centre office supply does remain one of the biggest challenges for the city and all the stakeholders promoting future growth. Last year’s figures represent a 69% decrease from the peak levels recorded in 2012.
“The retail sector remains strong off the back of intu Victoria Centre’s £40 million development which helped to boost rental rates and out of town, the food retail sector has dominated new developments.
“There is a lot of anticipation about redevelopment in the south of the city with the Broadmarsh car park and bus station demolition well underway. It’s no secret that regeneration to that area and the Eastside is much needed. Let’s hope 2018 is the catalyst to continued investment and new development in Nottingham.”
