22/03/2010
Crawley’s location at the heart of the Gatwick Diamond economic catchment makes it an attractive base for major occupiers; indeed the town still has a higher level of large businesses within it than the national average.
Whilst the residential market receives most of the press commentary, the downturn in the commercial property market has had its effect upon owners and businesses. Since achieving historic highs in 2007, we have seen reductions of 40% across some market sectors. Understanding how the market has changed and in particular the local property dynamics is vital to ensuring a successful property strategy for your business.
The office sector has been particularly hard hit, with very few transactions being completed in 2009, whilst the industrial/warehouse sector has seen more activity and higher than average take up as businesses have been able to take advantage of reduced prices, greater incentives and lower capital expenditure associated with a move.
The good news is that Doosan Babcock, with their recent purchase of Brooke House on Manor Royal, and Thales, with the completion of their new HQ, have committed to the town for the foreseeable future and the banking and professional sectors continue to view Crawley as a regional centre allowing them to service the south east quadrant of England.
Crawley’s office vacancy is currently circa 650,000 sq ft, 200,000 sq ft more than average, with take up last year of 127,000 sq ft (including Doosan’s purchase of Brooke House at 117,000 sq ft). Remove this transaction and one can appreciate the dire state of the office market in the town.
Currently vacancy within the industrial/warehouse sector is around 850,000 sq ft, again 200,000 sq ft more than usual, with take up for 2009 at 240,000 sq ft, which is slightly higher than average.
Whilst landlords with voids are feeling economic pain, tenants or purchasers have had an opportunity to capitalise on the market, and in a few cases real bargains are being secured.
Some opportunities are still being missed; tenants do not often consider that there could be value in their lease and are simply too busy concentrating on their core business. It is a great time for occupiers to improve the terms of their leases if they have a lease break or expiry in the next two or three years, delivering much more favourable terms and other unexpected benefits for their businesses, but there are some key rules to follow:
- early negotiation pays dividends
- break clauses can be worth a lot to the occupier
- business needs have often changed and by exploring the options with your landlord, you may well find there is now flexibility you didn’t think existed.
but…
- you need to be proactive
- consider the alternatives and negotiate
- act sooner rather than later
