That’s the commercial property agency’s view of the market midway through the year informed by its agency teams in its four offices in Peterborough, Huntingdon, Cambridge and Bury St Edmunds from which it serves the region.
The ongoing low base interest rate regime of the Bank of England and the absence of better performing investment vehicles or asset use classes sees commercial freehold property opportunities attract not only investors but investor-occupiers too.
Barker Storey Matthews’ review of its agency activity to date in 2018 sees each key location in the region report most activity in the particular sector which has come to characterise the stock and demand in that location.
There is a strong market for all types of freehold commercial property in the Peterborough area but industrial premises are selling most strongly. The overall lack of investment stock is forcing up capital values to well in excess of the peak prior to the financial crisis of a decade ago (2007/2008). There is also demand for office freeholds.
Industrial occupiers in Peterborough are quick to snap-up larger industrial/warehouse units. A 20,000 sq ft industrial unit at The Links in Orton Southgate has just been let for £6.00 psf. Larger buildings are in demand with a number of pre-lets secured at Roxhill’s Peterborough Gateway development, including pre-lets to local companies E-Leather and Coloplast.
Against a precarious national picture for retail, vacancy rates in Peterborough are very low when compared with other cities. Barker Storey Matthews’ retail agency specialist in the city has recently commented on the renewed view of independent traders and occupiers by small, private landlords, with a particularly vibrant ‘indie’ café bar and restaurant scene emerging this year.
Barker Storey Matthews’ agency experience in Cambridge so far in 2018 sees retail vacancy rates creeping up but the city is faring well when set against the national drift for retail.
Cambridge complements the agency’s regional experience in reporting vigorous demand for freehold property in the area, particularly industrial. Its Cambridge agency acted for the vendor in the sale of an industrial investment at Mercer’s Row in the city for £1.5 million - the net initial yield of 6.24 per cent demonstrates demand.
However, investors need to fan out to the wider Cambridge-fuelled satellite area for freeholds, given the lab and office character of the city for which occupier demand remains strong. But, again, lack of prime property means occupiers need to look to the wider area to find the size and calibre of office and lab space.
Lettings of note by mid-year include the assignment of a 31,100 sq ft office building at Cambourne Business Park and the pre-let of a new 11,500 sq ft medical centre on Fordham Road in Newmarket.
Commercial property markets in Huntingdon and surrounding Cambridgeshire market towns are witnessing the ‘A14 upgrade’ effect, according to Barker Storey Matthews’ agency team who cover this part of the region.
Here too, industrial freeholds are in demand not just by investors but owner-occupiers and the focus is on small industrial units from 1,500 sq ft to 5,000 sq ft. A development under construction at the St Ives junction of the A14 – Willow Court within The Lakes Business Park - will be completed in November. Already all the units are sold with a half and half split between investors and owner-occupiers.
There is an appetite for well-located industrial development land as investors and speculative developers look beyond 2020 and the end of the A14 upgrade to the significant opportunities better connectivity to the Midlands, the North West and the rest of the country will bring to Huntingdonshire.
Quality offices with good commuter access in the market towns of St Ives and St Neots are also standing out for office occupiers.
Light industrial, semi-trade counter occupiers are on the hunt in Huntingdon for units of 1,500 sq ft to 3,000 sq ft. In saying that, however, Barker Storey Matthews has recently acted for the site developer in the sale of a 140,000 sq ft brand new unit at Alconbury Weald and for the landlord in the letting of two warehouses totalling 22,000 sq ft on Huntingdon’s St Peter’s Road Industrial Estate.
Commenting on the region’s mid-year commercial property market, Steve Hawkins, Managing Director, Barker Storey Matthews, said, “The spotlight fell on industrial last year and remains focused on that sector this year so far for occupiers and investors.
“The rise of the investor-occupier gives an interesting twist to the freehold market and is indicative of an enduring belief in the long-term investment value and security of bricks and mortar.
“With the base rate remaining unchanged to date in 2018, BREXIT seems to have had little negative effect on market activity.
“Any effect any BREXIT-deal may have on the market is now parked until the autumn, at least, and will, in all likelihood, take months, if not several years, to play out here.
“It’s business as usual over the summer for our agency teams in their core sectors.”