The Great North surge: a boost in commercial property is good news for the North East
The latest news from the Royal Institution of Chartered Surveyors (RICS) is that 41% more surveyors were seeing increased demand for commercial property in the North East during the first quarter of 2015. That’s a huge increase, and a fantastic reflection of the growing economic health of the region.
Looking up
In the first three months of the year, property deals in the region topped £154m, figures from Lambert Smith Hampton’s UK Investment Transactions report show. That’s a 3% increase on last year’s numbers, and a solid basis for surveyors’ optimism.
As well as the increased activity, increased demand is likely to be accompanied by a tightening of the market, which should see availability decline and rents rise. The RICS Commercial Market Survey found that 22% more surveyors in the North East are already seeing a decline in availability, while 23% expect rents to rise as soon as the next three months.
Overall improvements
As ever, Dukes Bailiffs is keen to view the news with a little scepticism. Rising rents are a good thing as long as they're sustainable, but the last thing commercial landlords needs is tenants struggling to meet their monthly payments, which can cause serious cashflow problems.
The good news is that this surge in demand does appear to genuinely reflect economic improvements in the region. Stats from the Office for National Statistics (ONS) have shown that as investment and tenant demand in the commercial sector have increased, so have UK GDP and employment growth.
This is borne out by a separate survey from Lloyds, which found that the North East is showing the strongest economic growth of all the UK regions, with a score of 62.4 on the index of business activity in England (any positive score shows growth), reflecting increased factory output and growth in business productivity. As the region with the most start-ups outside London, the future looks relatively rosy for the North East.
If you want to take advantage of this growth, but you’re concerned your cash flow can’t support further investment due to unpaid rent arrears, or you want the right support systems in place before raising your rent, we can help. Contact us and speak to advisor today for more information.
