Scarcity to ‘drive prices up’ in year ahead
Scarcity is expected to drive up land and property prices in the West Midlands this year, despite the ongoing uncertainty caused by Brexit and the weakened Sterling.
The out-of-town office market, industrial and logistics sector and residential land are all forecast to be impacted, an audience of property professionals were told at JLL’s annual predictions event.
The agency’s industrial and logistics director, Carl Durrant, highlighted the low vacancy rates but believes “there is no sign of this easing in the foreseeable future”.
He said: “In the Midlands the likes of Amazon and JLR still have strong expansion programmes but they are not alone. Many retailers and industrial companies are carefully reviewing their operational needs which will lead to new space requirements.
“There are some sites which are suitable for speculative development and this needs to take place otherwise there is a danger that some occupiers will look outside the region for solutions.”
A particular challenge is the availability of prime sites for buildings larger than 500,000 sq ft, and the out-of-town office market is also suffering from a scarcity of larger options.
“The out of town office market saw rental growth in 2016 and we expect that to continue in 2017, with the scarcity of grade A and larger floor plate office supply,” said JLL’s office agency director, Jonathan Carmalt.
“Office take-up in 2016 fell just short of the five and 10-year averages in both the in-town and out of town markets. Occupier uncertainty is clearly a factor, with some occupiers bound to delay decision making, but there are reasons for optimism.
“The lack of supply in the out of town market is a threat to take up levels. Nevertheless, enquiry levels remain strong and the first evidence of prelets appeared in 2016, albeit at a relatively modest level.”
Residential developments are also being hampered by the availability of land.
Richard Roberts, residential director at JLL, said: “The Birmingham supply issues have not gone away and land allocations for over 30,000 homes are still yet to be identified. Surrounding authorities will have to bear the burden of Birmingham’s supply problems and this is likely to lead to significant areas of greenbelt land being subject to potential development.
“Irrespective of the authority area, land supply problems throughout the wider West Midlands will continue to provide opportunities for promoters of strategic residential land throughout 2017.”
