Craig Knights 11 620x413

Resurgent Economy Driving Increased Demand For Commercial Property, Says Local Expert

Published 1 May 2015

Craig Knights 11 620x413A resurgent economy is leading to a mismatch between supply and demand for commercial property, with rent levels being driven upwards, and a steep fall in availability of property for investors.  That is the message from the latest RICS UK Commercial Property Market Survey – and the picture is the same in Norfolk according to a local commercial property expert who helped contribute to the report.

Craig Knights, partner at Arnolds Keys, says that an influx of investors from London is helping to strengthen freehold prices, particularly within the office sector, whilst demand for  lettable space continues in both the office and industrial sectors continues to grow.

The RICS report claims that a ‘surge in investment and occupier demand points to a strengthening macro backdrop’, with both investment and occupier demand continuing to increase with ‘renewed momentum’.  The survey showed that in Q1/15, demand for lettable space increased for the tenth quarter in a row, the longest period of uninterrupted demand since RICS began compiling the survey in 1998.

“What is interesting is that this trend is not just limited to London, but is being seen right across the country, including here in Norfolk,” said Craig Knights.  “The strengthening economic outlook is leading to the growth in demand heavily outweighing that in supply, leading to a mismatch that can only drive up both rental yields and capital value of commercial properties.

“Price expectations are certainly positive for office and industrial property, and although they are a little more modest for retail units, demand for prime location retail property continues to grow, and as a result I would expect to see growth for secondary location retail units as well, albeit at a more modest level.”

Mr Knights pointed out that the RICS survey suggests that the conversion of office units into residential use has reduced supply – a national trend which is mirrored in Norfolk, and especially in Norwich.

“The outlook for investors is very good indeed, with the mismatch between demand and supply driving up yields, and likely to edge up capital values as well, particularly for grade A and prime location buildings.

“In particular, we are seeing an influx of buyers from London, who are looking for better returns than they can achieve in the capital where property freehold prices are very high indeed.

“After so many years of recession, there is still some innate caution amongst investors, but this continued run of increasing demand should finally inject high levels of confidence back into the market.”

Share this story

Arnolds Keys Blog

Clive Hedges 2 416x620

A Load Of Political Hot Air

1 May 2015

By this time next week we will know how many Parliamentary seats each party has won – although I suspect it will be considerably longer before we know who is... Read more >

Arnolds Keys North Walsham Easter Egg winners 2015 620x411

Egg-citing Times For North Walsham Youngsters

23 April 2015

Three youngsters were able to tuck into an extra Easter Egg after they won a colouring competition held by local estate agent Arnolds Keys. Read more >

Craig Knights 11 620x413

The Political Fallout Continues

22 April 2015

The Election may only be a couple of weeks away, but already-made political decisions continue to have an impact on the world of commercial property. Read more >

Kieron Williamson with the Arnolds Keys dragon 620x384

Dragon Painted By Kieron Williamson To Be Unveiled

13 April 2015

The latest dragon taking part in the GoGoDragons! event in Norwich is to be unveiled at Norwich Castle – and it is set to take the artistic world by storm. Read more >