A DEFINITIVE report on the East Midlands commercial property market shows that the region is continuing to progress – and is poised for success and opportunity.
The Innes England Market Insite report has been monitoring the regional property market over the past decade – providing individual focuses on Nottingham, Derby and Leicester. Across the region, the 2012 report highlights:
- the East Midlands economy is holding up compared to the rest of the country – as evidenced by employment figures
- the region is to benefit from the continuing work of the LEPs and the Leicester and Nottingham enterprise zones
- millions of pounds in funding from central government through LEPs and the Regional Growth Fund.
Managing director Robert Hartley said: “It’s been another challenging year for the property sector, but the East Midlands has stood firm – and a number of major infrastructure schemes commenced in 2012 which will give the region a boost and increased confidence.
“As well as the announcement that the long awaited £150 million improvement to the A453 would go ahead, there was also welcome news for Nottingham of a £60 million investment in the city’s creative quarter which will bring jobs, create expertise and enhance business in the area.
In Derby, work started in the city on the new £22 million sports arena and velodrome on Pride Park – and the development of Lowbridge’s new Grade A offices at Friar Gate Square – the first new city centre office building for two decades.
“In Leicester, the city council’s Innovation Centre on the Science Park got underway with completion due later this year, while at Hinckley, the Enterprise Zone at MIRA Technology Park offers lots of opportunities to R&D businesses.”
While the East Midlands certainly had lots to shout about, in terms of property, sectors remained constant, he said. The industrial market looks static, the office sector has seen a number of large transactions in 2012 across the region and while retail is struggling across the UK, the East Midlands is generally holding its own.
However, despite the dismal economy, there was a “surprising number” of transactions in the East Midlands in 2012, says Robert. Innes England alone completed 400 transactions across the region – an increase of nine per cent on the previous year.
“One of the main themes from this 2012 report is that there is a lack of supply of Grade A space across the commercial and industrial sectors,” says Robert. “This lack of supply is a particular concern because it constrains activity.
“For the East Midlands as a whole there is a lack of good quality space which of course means a lack of supply of employment land. There has been precious little development in the last four years and this continues to be a worry. However, this lack of space could encourage developers to start building speculatively – which would much welcomed.”
Following the second quarter of 2012, the UK economy slid back in to recession. A number of factors caused this but it was primarily influenced by slow growth in the global economy exacerbated by a continuing lack of bank finance, stubbornly high inflation and a heightened insecurity caused by the Eurozone crisis. All this resulted in the general mood from mid 2012 being extremely cautious, said Robert.
“Making predictions for 2013 is difficult as we have seen several years of poor economic conditions. Ideally I would like to predict a blossoming 12 months ahead for the East Midlands commercial property sector with rising rents and burgeoning speculative development. However, against the backdrop of the predicted economic scenario and slow growth, it is difficult to see the economic background dramatically improving over the next 12 to 18 months,” he added.
Robert says the East Midlands commercial property market is almost certain to face another challenging year in 2013 but as an industry, one of the key issues will remain at the top of the agenda and that’s the availability of bank funding.
Robert added: “There are substantial challenges ahead, but we should not forget that Derby, Leicester and Nottingham all have substantial and diverse economies. I am confident that all three areas face these challenges head on and will continue to make economic progress in 2013.”