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Three months ago, I wrote, "it is not all doom and gloom in the industrial property market".
I also suggested that "whilst there was still a healthy level of enquiries for warehouse and industrial accommodation most occupiers, irrespective of their businesses' good state of health, were concerned about the potential longer term impact of the global economic recession, and that any relocation decisions were not being taken lightly".
Recent evidence would suggest that there are increased levels of confidence in the business community, driven in part by a recognition that the economy is unlikely to get any worse, and that successful businesses need to continue to move forward if they are to really capitalise on the opportunities available as the economy moves out of recession.
In the last three months, it has become clear that the level of enquiries for commercial property across West Surrey has shown a distinct improvement, most significantly, this has been demonstrated through new commitments being made by a number of companies who had been in the market considering relocation over a protracted period.
At Henley Park in Normandy, near Guildford, Storecore and Kirk Petrophysics have both acquired units of approximately 11,800 sq ft each, and strong interest is now being expressed in the last two vacant units on that estate.
Vail Williams LLP have been marketing a new development in Camberley, know as J4, on behalf of SEGRO, and whilst there has been a reasonable level of enquiry since the estate was developed, the first deal has now been completed to Kinet-X in a unit of approximately 6,700 sq ft.
Other enquires are now beginning to develop and we anticipate being able to announce further lettings in the very near future.
Equally telling has been the recent sale of Unit A at Network 331 in Ash Vale, a property of 10,281 sq ft, which we were able to sell to Lincad with a deal being completed within only 10 weeks of the property first being put onto the market.
A neighbouring property in Nexus Park of 21,000 sq ft has also recently been put under offer to NuMark Alesis who have been contemplating relocation over the last two years.
The evidence confirms that there is a level of pent-up demand being released as a result of the increased confidence, although we anticipate that this level of activity will continue over the course of the next few months.
Looking into the medium term future, I anticipate a strong recovery in the freehold property market, particularly for smaller buildings.
Demand was certainly very good for this type of product two and a half years ago when interest rates were at 5.5%.
With the base rate currently at 0.5% and as finance becomes more readily available, the cost of purchase will be highly competitive and likely to be significantly cheaper to the equivalent rental space.
With the tax benefits that are often secured through purchasing, this is likely to be a very cost effective and desirable option for property occupation.
Whilst the current outlook for the industrial market is looking considerably more encouraging than has been the case for many months, this enthusiasm should be tempered. The wider economy still has a long way to go before we return to a more stable trading platform, and no doubt with many significant challenges to be faced along the way.