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It has become a tradition in the property market at this time of the year to think ahead to what the next 12 months are going to hold says commercial property agent Prop-Search.
2011 started with increased activity within the commercial property market, with most agents letting more property in the first six months than in all of 2010. The summer months saw a marked decline in enquiry levels and now into the autumn, a tangible undercurrent of uncertainty and caution has returned, resulting in less activity. However life will go on and given the levels of floorspace transacted throughout Northamptonshire during 2011 there is more to inspire gentle confidence than gloom.
Previously, the major emphasis of investment in the economy had been geared towards the public sector and how this influenced the growth in demand. The next five years are likely to see a continued shift with the corporate sector expected to fill the gap left by the public sector cuts in order to drive the economy forward.
Filling the investment gap will prove to be no mean task and will be made even harder with the threat of inflation having an upward impact on interest rates. Investment influences the performance of the economy, for example – new technology, plant and machinery and indeed commercial buildings, and is inextricably linked to both the cost and ability to borrow money. But it is of course difficult to say when the banks are going to become more willing to loosen their purse strings.
Pumping £75 billion into the banking system won't guarantee that they will in turn lend it to customers. High interest rates – compared with the base rate, substantial deposit and arrangement fees will continue to prove the stumbling block for most looking to borrow money.
This is leading to some cash rich companies/individuals entering the lending market. We now have clients prepared to lend money on property on terms less onerous that the average retail bank. These are ‘property people' who understand ‘bricks and mortar' and can achieve a better return on their money through lending it, than saving it! We may be witnessing a new dawn in the property sector.
There is undoubtedly a requirement for increased investment from the corporate sector if the economy is to get back on track. Northamptonshire has been the subject of considerable investment during the past five years but over the last couple of years this has all but dried up – with little new development coming forward.
Having said this, a handful of developers with continued confidence in the County who embarked on speculative schemes have had their support rewarded.
Lodge Park Developments commenced its St Crispins Local Centre at the beginning of 2010 comprising 25,000 sq ft of mixed use space and has seen a continued stream of lettings ensue. Occupiers now include a One Stop convenience store, estate agent, dentist, funeral directors, coffee shop, hair salon, children's day nursery, Chinese restaurant, Indian restaurant, florist, beauty salon and a fish and chip shop. Lettings are also underway for a tailors and a toy shop. Limited opportunities to lease further retail and office space remain in units from 499 sq ft.
There is some hope that the proposed changes to the planning system will identify and speed up development opportunities. This is of course once some Local Authorities have entered the ‘real' world and realise that their borough cannot be preserved in aspic. They need to accept economic growth and projections to help meet the need of business and help make the economy fit for the future.
There is some positivity for new development in the County as various applications are being submitted for planning, although it remains to be seen if any of these will be developed speculatively. Roxhill Developments has recently submitted plans to build a hotel, pub, office, industrial and distribution units on a site off Junction 10 of the A14 in Kettering. The proposed development will encompass some 90 acres and is located close to the Morrisons store.
So what will 2012 hold for us? Probably much the same as 2011 delivered. One thing is for sure having implemented significant austerity measures the Government now needs to encourage job creation. This will lead to business expansion and growth in the economy, both of which will see development return to the commercial property sector.
The foundations are shaky but they are there. Rome wasn't built in a day – but it was built!