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BLOG: Comment on the state of the commercial property market in Lancashire
As property consultants working across the commercial sector, we get a good bird’s eye view of the entire commercial property market. Our role working with clients across several sectors sees us helping to acquire, maintain, conduct improvement works and dispose of commercial properties throughout the region and there are a number of trends we’ve noticed over the last 12 months.
These are as follows:
Generally across Lancashire there is a lack of good commercial building stock available, including a shortage of industrial space. Demand is generally outstripping supply in virtually all parts of the industrial market. There is particular demand for smaller industrial units of circa 1,000 sq ft, from tenants, owner-occupiers, and investors. There is a similar interest and lack of buildings available right up to the other end of the scale in much larger warehousing/distribution spaces.
Prime space and newer buildings are more sought after, as opposed to poorer secondary spaces.
The overall deficit in supply and a lack of development land seems to be impacting all users, be they in manufacturing, distribution, or any other sector.
The lack of stock and increased demand is meaning that we are seeing increases in rental levels and capital values, particularly for better quality commercial/industrial units.
The lack in supply of suitable space is also impacting operators that wish to move commercial premises, for example for expansion purposes. Although some larger businesses will be cautious about expansion due to macro-economic factors, there are multiple companies across the county with appetite to relocate and expand, but are effectively being prevented from doing so by the lack of options available to them.
Although the market and developers are reacting as best they can to maintain capacity, there is a lack of land that is allocated for employment, which is unfortunately stifling the supply of new industrial units across the county.
Lancashire has an interesting mix of office space, with much concentrated around its major towns and cities but a large amount also dotted around rural locations in addition to a number of key business parks in out-of-town locations, close to motorway junctions.
Whilst some occupiers are drawn to the availability of on-site parking and lack of rush hour traffic in the more rural locations Lancashire has to offer, demand for rural office space is generally mixed. For some businesses, being in the hustle and bustle of a town/city centre with better public transport links is preferable.
Demand, rental levels and asking prices for offices took a massive hit post-recession, and have not recovered to previous levels. Demand for smaller spaces in accessible locations such as Buckshaw seems to have recovered somewhat, but larger, poorer quality offices in particular tend to lie vacant, requiring long marketing periods and significant incentives to attract any form of occupation.
For established, medium-sized professional firms seeking say 2,000-5,000 sq ft of office space, there is very little available currently.
We are seeing a trend for businesses that own their own office space to improve and remodel their existing space rather than move.
Very few speculative office developments have been built in recent years, which is creating a lack of Grade A office space.
Businesses wanting to locate themselves or relocate in Lancashire will only be able to do so if the supply of quality space improves, but with construction costs relatively high in relation to end-values it is difficult to see developers embarking on large office park developments in the foreseeable future, at least until rental values and capital values increase.
Finding the right business premises and securing it at the right price and on the right terms can prove key to a company’s long term success. Lea Hough can help commercial clients to assess and secure commercial premises of all types by way of commercial property valuations, schedules of condition, pre-acquisition surveys, schedules of dilapidations, rent reviews and pre-lease assessments. To get in touch with a member of our specialist commercial team, click here.BACK TO NEWS