The value of Commercial Property

The commercial property marketplace in the UK continues to struggle in the current economic climate.  The first 6 months of 2012 show a downturn again and the outlook to be less that favourable.  We posted recently about regional shopping centre acquisitions and it is of note that the survey shows overall values in the sector down by 6.3% in the first 6 months of the year.

There has been a slight up turn in the office sector which, particularly in central London, has shown minor growth.  It is of note that the general trends in the office sector are in a downward direction, in terms of occupancy requirements.  New working methods, including the much heralded opportunity to work from home (how many organisations are getting that one wrong, I think we will have a posting on that subject alone in the near future?) and a changing workforce demographic are all factors that would suggest a downturn in demand could, over time, lead to a diminishing in values.  However, limitations in the availability of funding for new development, the shaky perception of the market in general, the continuing trend for conversion from commercial to residential in parts of Mayfair and the West End combined with the requirements for organisations to develop and implement ever more strict environment and sustainability plans mean that the limitations on supply are bolstering the current marketplace.

Where this will go in future is very much up for discussion.  The standard institutional lease is still alive and well and living a life under a new identity.  In this new guise, there are more opportunities for prospective tenants to negotiate with the landlord from a position of strength and as such a stronger model for occupancy is being introduced.  Watch for further development in the process.

For those with a strong nerve and deep pockets, taking advantage of the current market where values of freehold are potentially at their most advantageous to the acquirer, entering the commercial property sector in any form could be seen as the move to make.  Carefully selected and prepared, commercial sector investment now and held over the long term could be just the thing.

Take Stock of the situation

The commercial property sector is to come under further pressure during 2012 in the light of the current economic climate and the uncertain times ahead for the Euro Zone.  Both rental and capital values started to show sign of weakening during the Q4 last year and are expected to continue to decline during 2012 as the continuing uncertainty over the future of the British recovery continues.  Tough market conditions in the retail sector have led to have affected high streets across the country.  Even the usually resilient London market is starting to show significant stress with rental levels and capital values starting to decline as the number of potential transactions slows.

However, all is not lost!  With the decline in value for the landlord comes the increase in opportunity for the tenant.  Now is the ideal time to undertake a comprehensive review of all your lease and occupancy arrangements.

·                     Are you able to exercise any lease breaks?

·                     Are any leases up for rent review?

·                     Are you holding over?

·                     Have your business needs changed?

·                     Is your occupancy at the optimum?

·                     Could you place any non essential requirements in better value accommodation?

·                     Is there an opportunity to outsource activities?

Every cloud has a silver lining, see what lies behind this one for your business.

Innovation@jaltd.co.uk

Harry Potter Stars' Invest in Property

The young stars of the Harry Potter movie franchise have been spending their respective wealth by investing in property in the UK and abroad reports http://www.primelocation.com./  Harry Potter, in the guise of Daniel Radcliffe, has eschewed the attractions of Privet Drive and is said to have spent a tidy £11.2 million on investment properties, including a £3.5 million penthouse apartment overlooking the Hudson River in New York.

Rupert Grint who played the irrepressable Ron Weasley, has spent more than £9 million on three addresses and, whilst all are believed to be in the UK, it is thought The Burrow is not amongst them, whilst the very lovely Emma Watson has maintained her muggle roots and divided her investment portfolio of undisclosed value between Britain & France.

No details of the acquistions are available but it has to be assumed that they will be predominantly residential, rather than commercial investment properties.

Harry Potter and the Deathly Hallows 2, the last film in the series, was released in the UK on July 7th.