THIS should be a year of gradually improving market conditions for commercial property in and around Basingstoke.
That is the outlook for the local commercial property market, according to London Clancy director Mark Clancy, who – looking at the wider M3 and M27 corridors – sees an increase in business confidence coupled with delayed investment decisions finally being actioned.
Based at the firm’s Brinkletts House offices, in Winchester Road, Basingstoke, Mark said: “The brakes are not off, but there are grounds for optimism when considering some of the major investments that are being made in our area such as Sainsbury’s new 600,000 sq ft distribution depot in Basingstoke.”
He cites other local examples of where well-established companies have expanded or relocated, including wine merchants Berry Bros & Rudd, at Houndmills, and relocation specialist HCR at Belvedere on Basing View.
“This activity is being driven by expanding markets and/or the ongoing need to achieve greater operational efficiency and cost savings,” said Mark “Flexible leases with short-terms and regular breaks are also enabling businesses to more regularly review their property requirements.
“Either way, the current property market in the M3 and M27 corridors offers incredibly good value for both occupiers and owners.”
Mark notes that there has been increased development activity in recent months.
“This has been primarily occupier-led, but hopefully it will be the start of a trend that will continue during 2013 as the government progresses the planned increased expenditure on infrastructure projects and introd-uces a three-year exemption from empty rates for new developments.
“More generally, the commercial property market will benefit from any relaxation in the availability of finance whether through the existing Funding for Lending initiative or the promised £1billion injection from the government’s new business bank.”
Mark also said that money flowing into the central London property market, in particular from overseas funds, may be seeping into this region.
“In 2013, the industrial and warehouse property sector will continue to be the best performing, once more, particularly with regard to modern stock and with the shortage of opportunities maintaining Grade A rental levels of between £9 per sq ft within the upper M3 corridor and £7.50 per sq ft in Southampton.
“The office market will continue to battle with the substantial over-supply of secondary space, with owners exploring alternative uses and conversions. The lack of Grade A space will maintain headline rents at between £17 and £20 per sq ft.”
Mark predicts that 2013 will be another difficult year for town centre retailing, but secondary rents are likely to stabilise as local demand replaces failed national multiples.
Mark said: “The strong demand from discounters, such as Lidl, will be sustained as a factor of the economic conditions.
“The investment market within our region is likely to remain largely unchanged with buoyant demand for well-let prime opportunities and secondary investments only attracting interest if there are asset management or refurbishment opportunities, even at highly attractive double digit yields. In general, risk aversion will be the order of the day.”