James Bird Senior Surveyor at Bulleys advised that research they have carried out into the Black Country commercial property market is showing that there is a lack of freehold property currently on the market which in turn has been a contributing factor to a lack of freehold transactions.
Whilst there has been a healthy number of enquires looking to purchase commercial property the lack of supply and the reluctance of owners to sell their premises, if they feel they are selling at a reduced figure, has led to a shortage. This in turn has seen some premises receiving a number of bids and competition from purchasers.
This competition hasn’t led to price rises yet however and property shouldn’t be ‘over priced’ but the lack of supply is surprising to companies expecting to snap up a bargain and who are expecting to have a choice to pick from.
Even when the right building is identified and terms agreed the banks can still cause frustration for Black Country businesses as the issue is not what people are willing to pay for property but it is what the banks and financial institutions are willing to lend. The banks criteria for lending are more onerous than ever and therefore cash purchasers and businesses with good relations with their banks are in a better position to secure premises. However due to the lack of stock owners are still able to sell at a reasonable level and purchasers are not having it all their own way.
Similarly on a rental/leasehold basis there is a lack of supply in new/good quality industrial/warehouse units. An example is Vernon Park at Junction 1 M54 where we are seeing proof of this demand from businesses. Vernon Park consists of some of the last speculatively built units in the West Midlands before the recession stopped speculative construction in 2007/8. The development totalling 126,952 sq ft has now all been let or sold. J Banks purchased circa 40,000 sq ft with an asking price of £65 per sq ft.
Bulleys are continuing to actively market phase 2 of the site where there is planning consent for up to 120,000 sq. ft. on a design and build basis and a number of potential enquiries are being discussed from firms keen to be close to the new Jaguar Land Rover facility at i54.
Elsewhere in the Black Country this demand can be shown with Bulleys having recently let a modern 60,000 sq ft warehousing/logistics facility at Britannia Point to an undisclosed occupier and terms agreed on another 60,000 sq ft on a leasehold basis.
James concludes that there are still enquires in the market for modern self contained units however there are not the buildings available to meet this demand at present and one must wonder if we will see speculative development returning any time soon as this demand continues.
For further information contact James Bird Senior Surveyor Bulleys 01902 713333