Market upturn - let's get real
8:20am Tuesday 24th April 2012
At the time of writing this it is a wet and cold Wednesday afternoon in mid-April – not much to get excited about. Well, think again. In Stourbridge the Tesco regeneration has started with a bang – at last!
All a bit of a mess at present but before we know it the building will take shape – whether you like the design or not it will make a major change to our townscape and the vitality of the Town Centre. On the back of this with both the Royal Institution of Chartered Surveyors and the Bank of England’s quarterly reports on the state of the property market published signs are encouraging.
The Bank reports there had been a rise in the number of property viewings, offers and transactions in recent months, although demand remained significantly below its pre-recession level. Contacts suggested a number of reasons for the improvement in conditions. The Government’s FirstBuy scheme and construction companies’ own initiatives had bolstered demand for newly built property. Growth in buy-to-let demand, partly in response to past increases in rental yields, had also helped to put a floor under prices. And there was thought to have been a rise in confidence among prospective buyers, some of whom had been holding back in case of a further weakening in the housing market. Part of the recent increase in activity was also likely to have been demand which had been brought forward, ahead of the end of stamp duty relief. Some contacts also suggested that vendors were becoming a little more realistic about asking prices.
Business sentiment is improving also with investment intentions pointing to a gradual rise in expenditure on capital over the coming year. That reflected a slight improvement in sentiment, as the worst fears concerning the euro area had not materialised. And some firms had decided to press on with investments despite continued uncertainty about the outlook. Among manufacturers, there had also been a slight pickup in reports of investment in additional capacity, usually from those in the export sector.
Future requirements for industrial occupiers in the West Midlands are likely to be satisfied by design and build solutions as Grade A accommodation availability dwindles due to lack of speculative commercial development.
The brightest situation remains in the industrial sector with smaller light industrial units remaining quite well let, although more price sensitive than hitherto, with higher demands for rent frees on lease renewals. The take up on offices remains problematic, with good deals for tenant’s right across the board.
Retail across the patch has remained quite well let, but the affect of the Tesco regeneration has yet to materialise. But a word of caution over the Budget and the lack of any real support to retail or manufacturing. Government initiatives such as sending Mary Portas “Queen of Shops” down the High Street to bring us a shopping renaissance had landed like a lead balloon on a retail sector that was struggling with problems rather deeper than window dressing.
Councillors need to carefully consider pedestrianisation of the High Street, bring in a 20mph speed limit, put speed bumps in and provide free, easy to access, parking bays where shoppers can park near the stores they want to visit, for up to an hour, to encourage people back into towns. We need to make it easier for people to access their local shops – then they will come back into town centres.
Developers are preparing for a market upturn, despite generally muted activity in 2011.This positioning for future development is occurring despite many areas of the UK having an increasing supply of secondary stock, although much of it is old and in some cases obsolete which is leading to trepidation from occupiers who are nervous about potential capital investment and dilapidations costs.
We have seen a 25 per cent surge in commercial property enquiries compared with the first quarter of last year and is very encouraging the market is clearly better than it has been for three or four years, and we just hope that this rise turns into something similar in terms of completed sales and lettings.