Growth in the East Midlands – a message of cautious optimism
Was 2013 the year when the economy finally threw off the shackles imposed by the credit crunch? It certainly feels that way. Though the property industry experienced another challenging year, the signs of revival are becoming more evident.
Guest speaker David Frankish, of CBI East Midlands, presented statistics at Innes England’s annual Market Insite event that provided support to feelings of an economic revival – for the first time since the crash in 2009, the economy has started to show signs of growth.
Following predictions at the backend of 2013, GDP growth has since been confirmed at 1.9%, the strongest in five years, and the Help to Buy scheme helped to stimulate the housing market, something which was reflected in an increased number of residential land sales.
By the end of 2013 the message was very much one of cautious optimism throughout the economy.
The property market was no different with the number of significant deals being done throughout the East Midlands indicative of the renewed optimism across the UK.
All three of the region’s major cities saw an upturn on the previous year across all sectors, but the front runner was investment where the total value of transactions increased by 30% on the previous year.
Even the subdued office market showed signs of revival with a number of larger space requirements being satisfied in out-of-town locations and an increased number of smaller-scale transactions in town.
The industrial and distribution sectors also saw rents begin to rise and incentives reduced.
The region’s retail scene also appeared to take a turn for the better during the latter half of the year. While the Highcross continues to dominate Leicester, the purchase of the Haymarket Shopping Centre by Kennedy Wilson and refurbishment of the Silver Arcade illustrated improved confidence in the market as companies continued to invest in retail. The same is also true in Nottingham, where both intu Victoria Centre and intu Broadmarsh are set for substantial investment.
Major projects in Nottingham led the way in 2013, with the city’s infrastructure undergoing a dramatic transformation. Work began on the £570m NET extension, which will double the tram provision in the city, as well as the long-awaited improvements to the A453 and the improved train station. Emphasis too has been placed on the arrival of HS2 and the benefits it will bring to the region.
The region is extremely well placed to take advantage of improved infrastructure and excellent transport links, something which was reflected in a number of key transactions in the distribution sector. Deals included the £82.6m purchase of the 900,000 sq ft M&S distribution centre at Castle Donington by Tritax for its newly listed Big Box REIT, a further 80,000 sq ft letting to Morrisons at Derby Distribution Centre as well as a commitment by DPD UK for a new 330,000 sq ft facility at Hinckley Commercial Park near Leicester.
Not only are good transport links key to attracting major distributors to the region but they are vital in attracting inward investment to our cities. A key case in point being Derby’s biggest ever industrial pre-let – a 632,000 sq ft warehouse at Derby Commercial Park to Kuehne & Nagel for brewery giant Heineken which was indicative of the region’s strong and, according to CBI figures, growing manufacturing base.
So, what is the outlook for 2014? Undoubtedly the commercial property sector will continue to face challenges, but the improvement in the country’s economy seems to have gained momentum and I hope that we are able to move through year with confidence.