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BREXIT – COMMERCIAL PROPERTY MARKET IMPACT?

BREXIT – COMMERCIAL PROPERTY MARKET IMPACT?

Since the historic decision in June 2016 to exit the European market, there has been numerous national articles giving conflicting views in respect of the property market.

As we enter 2017 and now over 6 months post Brexit, we have looked at the impact on the commercial property market in our area, with Nick Pearce, Chartered Surveyor and Director of the region’s largest agents, PPH Commercial.

Q:      How was the region’s property market pre Brexit?

A:       The property market had started to show some good signs of recover in 2014 and 2015 after five previously difficult years.  2016 started well with continuing demand, particularly for industrial and office space, although we had expected a slight slow own up to the Brexit referendum date for a period of about two weeks before. This is how we normally find things with a general election, but this was completely different.

In the period six weeks up to the decision, it was very much like a summer period as the market had virtually shut down, and the level of new enquiries coming in was   minimal in all sectors.

 

Q:      Has the market now settled since the Brexit vote?

A:       Until October the property market still remained relatively flat, although I suppose one must have regard for the fact that this also took in the main summer period. 

The period between October and Christmas is normally active, particularly in the office market, but it remained steady although there were some signs of improvement with fresh enquiries coming into the market place.  The first few days of January have, however, started off very well, but that is not unusual as a few New Years resolutions have been made and acted upon.

 

Q:      Has the decision affected rents or property values?

A:       Yes, but not in the way that one may expect.  The decision has created uncertainty for a number of businesses, particularly in the service sector, which has caused them to put on hold any relocation plans.  This has therefore resulted in lower than normal stock levels coming to the market and has therefore put pressure on the properties currently available.

As a result of this, rental values have remained very much at the pre Brexit levels, but in certain sectors values for vacant freehold commercial properties have risen due to the shortage of stock.

 

Q:      Do you expect this situation to change in 2017 

A:        Although we have only been back in full operation for a few days, the level of enquiries has particularly increased, which is to be fair quite typical in the first couple of weeks of January.  However, we have also received contact from a number of owners that are now bringing properties to the market, particularly for office and industrial units, and if this continues hopefully this will see further improvements in the market as there is pent up demand in certain sectors.

 

Q:      Will Hull City of Culture 2017 help?

A:        I would certainly hope so as the spotlight is going to be turned on the city for the year.

During 2016 there were new  enquiries coming in from outside the area, and one or two properties were acquired particularly in residential sector in the City Centre for conversion with people expecting capital growth due to  the City of Culture and the considerable number of people it will bring into the city.

 

Q:      Is the Siemens project affecting the market?

A:       Again the simple answer is yes.  The developments that are occurring around Hedon Road have taken up a considerable amount of industrial land. This take up and other renewable schemes are  putting pressure on commercial land availability throughout the region.

 

Q:      Will this have any negative effects:

A:       Not directly.  The job opportunities for both Siemens and the immense renewable industries developing in our area, offers an amazing opportunity for the region.  However, the only slight concern is that a lot of the renewable users are land hungry and this could cause some problems further down the line for non-renewable companies looking to expand, particularly within the Hull boundaries, as commercial land is very limited.  On the regional front, there is obviously additional land at Melton, but the St Modwen situation still remains unresolved in that having lost their residential planning appeal, there are still no signs of them re launching the site for business use, which is what is was zoned for and should be retained at all costs.  This is needed to deal with the future growth of businesses in the nature, otherwise they may look to relocate to other regions.

 

Q:        What about the proposed Yorkshire Energy Park?

A:        I have seen the plans and discussed the scheme with the owners and think it offers a very exciting and unusual opportunity in the area.  This is clearly needed to provide other sites and business space to deal with some of the problems that I have referred to earlier.

 

Q:      Finally, any wishes for 2017?

A:        Hull City to say in the Premiership and a win on the lottery would be nice!  Seriously, my main wish would be for the City of Culture to help positively change people’s perception of the City in which I grew up and to leave a lasting legacy for the businesses and people of our great city for the next generation.