South Hants commercial property review
3 June 2011
Within the commercial property sector Goadsby have experienced increased level of offers and transactions taking place in 2011. Along the South Coast, the industrial sector leads the way, where take up is good. Forward supply of good quality accommodation is decreasing, restricted by a lack of new development. As a result we are seeing a tightening in respect of tenant's incentives being offered and pressure on rents to increase for new or good quality refurbished accommodation. It would not be a surprise to see rents for better quality stock in this sector begin to rise in the second half of 2011.
Goadsby have been part of a number of high profile successes in this sector. On behalf of Minton Group, and in conjunction with our joint agents LSH, we have disposed of or have under offer 13 of the 19 new industrial units at Chancerygate Business Centre. This is a total take-up of nearly 50,000 sq ft of new industrial space. Prices have recently been reduced by 25% for the remaining units. The Glenmore Centre in Northam has only two units remaining, with strong interest in both as they offer some of the only freehold industrial space available on the east side of Southampton City. At City Industrial Park, Southampton’s premier trade counter location, joint agents Goadsby and CBRE have achieved another high profile letting with Formula 1 autocentres agreeing a 10 year lease with no breaks. This brings occupancy at the estate to over 90%, with only small 1,200 sq ft units now available. Outside of the city, Goadsby have continued this success around the M3/M27 corridor, with notable freehold and leasehold deals agreed in Eastleigh, Hedge End and Romsey. Eastleigh’s strength as an industrial location in particular has been proven with two recent freehold sales agreed along with our joint agent LSH, at quoting figures of £95 per sq ft.
The office sector along the M27 Corridor has also experienced something of a renaissance. There has been a flight to quality and a surge in demand specifically for 'out of town' locations with a number of deals taking place throughout the M27 Corridor region. This upturn in demand has been driven by tenants with breaks in their lease or with leases coming to an end, taking the opportunity to upgrade to better quality office space and with good parking provision. For the better quality accommodation rents have stabilised in this market, although generous rent incentives are still common place.
That said the out of town market also suffers from an oversupply of poor quality accommodation, which is either in need of refurbishment or situated in a poor location. This over supply continues to drive rents down for these office units. The City Centre office market continues to suffer from over supply and a lack of demand mainly driven by the general poor quality of accommodation and restrictions on allocated parking. There is demand for cheap open plan space in the city centre as evidenced by Goadsby letting over 30,000 sq ft at Capital House in Southampton where quoting rents are only £8.50psf.
The retail market has a healthy demand from sectors such as convenience stores, discount retailers and pawnbrokers are bucking the trend. There is also an appetite from sections of the leisure market with a number of the restaurant chains actively looking for accommodation and benefiting from taking vacant space in good locations on excellent terms.
This “growth” in confidence may be the result of a reduction in perceived “risk” in the occupational market as many leasehold deals have been agreed with considerably shorter lease lengths or incorporating regular tenant break options, giving tenants a parachute should it be required. But opportunities remain for excellent deals in the market for those prepared to take them.
For further information:
Contact: Andrew Hodgkinson, Goadsby Commercial
Tel: 023 8021 0142
Email:andrew.hodgkinson@goadsby.com
Web:www.goadsby.com
