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News

07 May 2017

Rising demand boosts industrial property values

Rising demand boosts industrial property values

With the recent publication of the first quarter Royal Institution of Chartered Surveyors (RICS) survey, Malcolm Grayson, Director at Andrew and Ashwell, compares the state of play in the local commercial property market:

Demand continues to grow for industrial and office premises, with a wave of recent deals successfully sealed – and more in the pipeline – for leading Leicestershire commercial property specialist Andrew and Ashwell.


The first quarter RICS Commercial Property Survey this year, reveals a more buoyant market, with industrial space outperforming office and retail sectors and experts cautiously optimistic for further growth. According to RICS, investor demand has been rising for regional commercial property across all sectors. Industrial assets are the most sought after, with 38% more respondents seeing an increase in demand for industrial space across the East Midlands. The industrial sector also performed well in capital value expectations and 48% more respondents anticipate prices will rise in the next quarter.

 

Grayson confirms the strong demand for industrial and office premises: “Prices are rising quickly, despite the forthcoming General Election and impending Brexit negotiations. There is extensive demand out there, partially fuelled by the on-going relative lack of new commercial property construction and in recent months we have finalised a whole raft of transactions. “Industrial property is certainly at a premium in Leicestershire. We have recently sold 35,000 sq ft of space on long leasehold for food manufacture at Boston Road, Gorse Hill.  “We also sold 41,225 sq ft of space on Barkby Road for textile manufacture within two weeks of going on the market. Storage space of 54,734 sq ft is also near completion on Barkby Road, Thurmaston. Further transactions include a sign manufacturer relocating to 24,772 sq ft of space sold on Marlow Road and a further 43,189sq ft let on the Whittle Estate at Lutterworth for automotive parts manufacturing.”

 

Andrew and Ashwell is also seeing an upturn in the office sector, with two units of 6,000 sq ft at Grove Park let and under offer and strong interest with terms expected on 10,000 sq ft of leasehold space at Grove and other locations, plus 6,346 sq ft let to Weightmans solicitors at Waterloo House in Leicester city centre.

While stores continue to face the challenges of Internet trading, cause for optimism, says Grayson, has been the sale of 2.1 acres of land north of Leicester to Aldi Foods. “It’s good to see new buildings going ahead in every sector. Other developments coming through are seven acres of new build industrial units and offices at Blaby Business Park, near M1 Junction 21 at Leicester Forest East, industrial and office units at Watermead Thurmaston and bespoke design and build opportunities at Loughborough University Science and Enterprise Park. “Given current levels of supply and demand, rents are expected to also deliver strongest growth in the industrial sector.”

 

Investment continues to recover, with the UK still seen as a safe haven for investors, driven by transparency and stable legal structures.
“Andrew and Ashwell has acquired and/or sold around £20m investment during the last 12 months, including prime offices on Grove, and Meridian parks, as well as multiple industrial and also retail units. Yields have typically been six to seven per cent.
“We have also just put Ariel Works on Temple Road, North Evington, to market as investment for £3.5m and there is strong interest, for which we are expecting to make at least the asking price.

“While shortage of industrial and commercial units remains a major issue in the East Midlands as employment land is lost to address the housing shortage, indicators are relatively robust, although trends may temporarily slow ahead of the election.”