Interesting time ahead after end of empty property relief

Apr 2 2008 by Graeme King, The Journal

An altered regulatory regime is set to change the way industrial property is handled. Keith Stewart looks forward to the new era.

THE forthcoming months in the industrial sector are bound to be interesting now that empty property rate relief is over.

The market may even start to see softer deals being offered in order for property owners to rid themselves of that liability.

In addition, land values and build costs are still high and with the changes in legislation, including energy performance certificates due later in the year, it may become more difficult for developers in the future to speculatively build-out new schemes without first securing a letting or a sale.

New current developments, however, are attracting lots of interest and this is evident at schemes that Naylors are currently involved with – for example, City & Northern’s development at Simonside, South Shields. Here phase one is now fully let or sold and phase two, due to complete in May, is 60% either let or sold.

Elsewhere, UK Land’s Eastern Avenue Trade Park scheme and Buildings for Business’s Queens Court developments on Team Valley are also receiving a good deal of interest.

In terms of smaller inquiries we are certainly finding a definite shortage of either new or secondary small space up to 5,000sqft in the market place. In the past few years, any sort of development of this size, especially if offered for sale, has always been quickly snapped up.

The number of inquiries we receive from small businesses looking to purchase starter units across the North East is encouraging for the general economic development of the region. However, with the lack of land supply, high build costs and limited gap funding making development appraisals difficult for developers to stack up, it remains to be seen where we will see new development of this type coming from.

Keith Stewart is a director of Naylors Chartered Surveyors.