Businesses facing upward pressure on rent
BUSINESSES in the North West are predicted to face further financial pressures, with commercial rents expected to rise by 4% on average over the next 12 months, the Royal Institution of Chartered Surveyors has warned.
The quarterly RICS UK Commercial Market Survey (Q3 2015) reveals that North West businesses within the office and industrial sectors are likely to experience the most significant rental increases over the next 12 months, at around 4.3% and 4.6% respectively, with London being the worst hit region (6%).
A lack of available leasehold commercial space in the North West combined with rising demand for such property is placing upward pressure on rents.
Demand for commercial properties in the North West – from both renters and investors – rose during the third quarter of the year, with 32% of respondents reporting a rise in demand for retail space (up from 28% during Q2), whilst 61% saw an increase in demand for offices (up from 40% in Q2).
Demand for industrial properties also rose considerably, with 61% of respondents reporting a rise in demand – up from 46% during the previous quarter.
Consequently, commercial property values are expected to continue to rise relatively strongly over the next 12 months.
A busier month after a very quiet summer. The level of enquiries has increased. The main issue is now lack of stock.
Mike Redshaw, of Nolan Redshaw, said: “After a strong first quarter, the general market seems to have plateaued, however investment activity is increasing.
“The continued success of the Logistics North site in Greater Manchester is restoring confidence in the commercial market and mirrors the increase in activity within the logistics sector nationally.”
Sarah Lewisbriggs of AMCAT UK in Whitehaven said: “The market in Whitehaven has been depressed for years but has been positively affected by the nuclear sector in the past five to 10 years.
“This effect is likely to continue over the next five to 10 years, with the development of the new nuclear plant.
“Whitehaven is likely to feel the main benefits from this, although there could be spin off residential market benefits in other towns in the borough, as well as for towns in neighbouring boroughs such as South Lakes and Allerdale as a lot of the nuclear workers may choose to live within the Lake District National Park area rather than the coastal areas.”
RICS chief cconomist, Simon Rubinsohn said: “While for individual businesses, the rise in rental values might not be particularly welcome, as a bellwether for the UK economy, the survey highlights some very reassuring growth patterns.
“Nationwide, we’re seeing a solid increase in demand for commercial properties across retail, office and industrial sectors. In other words, at the moment, however badly rental costs might pinch, they do not appear a barrier to growth.”
