Due to the recession and the years of austerity which have followed, there has been little new commercial development in Northamptonshire since 2008. It is no secret that during the first few years of the credit crunch there were fantastic deals for informed occupiers and investors, which were driven by a combination of an oversupply of stock and a lack of occupier demand. The resultant effect was a significant reduction in rents and capital values, and an increase in the incentives available to tenants.
However, since 2008 there has been a steady annual increase in take up of available stock in the office and industrial sectors, during which little or no new stock in most size ranges has come to the market. As a consequence, the quantities of available buildings within certain size parameters have evaporated, which has created a gradual increase in capital values and rents, causing an ever accelerating reduction in the incentives that are available to tenants.
The commercial property market in Northampton is close to hitting a critical point, whereby good quality space will only be created by new development. This will greatly improve the standard of the stock available to occupiers, but unless developers take the brave decision to speculatively build, these opportunities will only be available 12-18 months after occupier commitment.
The combination of these factors, combined with low interest rates have caused values in the commercial property investment market to surge over recent months, on the speculation of significant rental growth driven by a lack of available stock and increased occupier demand. For the savvy occupiers that are able to acquire existing buildings, there are still comparatively competitive deals to be done. However, for industrial and office occupiers planning to take on additional space over the next 2 – 24 months, now is the time to start looking, as for an increasing percentage new build maybe the only option available.
The TDB Real Estate team are actively involved in a number of strategic sites and would be happy to discuss your potential new build requirements. Please feel free to contact Oliver Thompson, Chris Drummond and Mark Brown.