Long term solutions needed for occupiers
Published November 19th, 2019
Over the last few months, we have experienced increased demand from occupiers seeking support in their business decisions. The question of their real estate and how the flexibility and usability of the space plays its part in maximising turnover, profit and staff retention.
This increased demand for real estate services is believed to be reflective of the various Bank of England and Royal Institution of Chartered Surveyors surveys, pointing to pent-up demand in the market. However, this pent-up demand follows a period of retraction in the market, with tenant demand across the UK reportedly decreased over the last quarter.
Occupier demand fell at a headline level, with the net balance slipping to -19% from -13% previously. Looking at the disaggregated sectors, much of this decline was within the retail sector. Demand for offices fell by a modest amount, net balance -9%, and industrial demand, whilst increasing was a more subdued increase from +20% to +9% in Q2 (source: RICS Q3 2019 UK Commercial Property Market Survey).
Regionally, our experience is demonstrating occupier demand across the office and industrial sector and, the need for longer term solutions. The capital requirement from businesses in future and long-term investment is such that companies are seeking proper understanding of all their options and how best to achieve the strategy. Coupled with statutory pressures; such as energy efficiency, the cautious but researched approach is gathering momentum across the market.
What was more associated with corporate retail analysis of property efficiency and effectiveness, is now expected and demanded by larger regional businesses. Subject to Brexit and its implications being understood, it is believed that pent up demand will be released as a strategically thought process, which will reduce the time delay at the approval stage.
The result could be that at the end of 2020, we are reporting significant increase in take-up of modern commercial accommodation, potentially further exaggerating the gap between second hand and new development. At the smaller size market, whilst there is a greater sophistication from occupiers, the need to speculatively construct industrial or office accommodation is as important as in any weaker confidence market. Thus, pointing to evidence that whilst we may be seeing pent up demand in the Boardroom, the market has slipped, and concerns of future trade withhold investment month by month.
Finally, the development process can be a lengthy and complex. Occupiers need to understand that this has also become a more sophisticated dialogue. The implication of design not only on the use of the property but also on the ability to create an improved working environment has assisted companies in their recruitment and retention.
For further details or advice on commercial property contact Simon Parsons at Berrys, 42 Headlands, Kettering on 01536 213169, email: email@example.com.