If there is one thing I can be certain of when writing predictions over the last (nearly) two years, it’s that they are likely to be proven wrong before the ink is even dry on the paper.
We are mostly ingrained to base future predictions on past performance, though it would appear there is little correlation between the two. Predicting what will happen with property based on what has happened before is therefore not without its risks.
I think though it is fair to say that property is often seen as a ‘safe haven’ when there are more turbulent waters around, as it is something both tangible and saleable where people feel more secure investing their money than in say stocks and shares.
The complication over recent times is that ‘property’ as a generalisation is no longer as safe as it used to be. I think there is now a wider appreciation that some property sectors are ‘safer’ than others, and those who have invested heavily in retail or office have in some cases caught a very nasty financial cold in terms of falling rents and falling values, as a result of shops closing down and offices remaining empty. Whilst many tenants in those two sectors have continued to pay their rents, it is the uncertainty over where the future demand for retail and offices is heading that has put some investors off.
On the flip side, others have seen this as an opportunity. The market for freeholds in both retail and offices remains, albeit with a different slant. Much of the demand for this type of space has come from developers looking to convert disused upper floors into residential accommodation, aided by relaxed planning laws, whilst retaining a core retail or office space within the property to maximise the potential market and mitigate risk. It is I think something of an irony that particularly in Derby we have for years been decrying the lack of city centre living, which was so desperately needed to drive the local retail and leisure economy, and it has taken the partial ‘hit’ on these sectors to provide the opportunity for that city centre living to now start taking shape.
In terms of industrial stock which is the other mainstay of commercial investments, this has remained resilient now for many years, and it is fair to say has been the best performing commercial sector when it comes to freehold sales, either as investments or vacant units. Almost everything we have listed has sold within days, and even one example of a hybrid office/industrial unit was put in solicitor’s hands on the back of a single phone call within a day of being put on the market.
One thing we have also seen a significant demand for is development opportunities, and I’m honest enough to admit I’ve been surprised by quite how strong demand has been. To illustrate the point, we put a site with planning for a 44 room student scheme on the market on a Friday and had a sale agreed by Monday. Other sites had sales agreed on the back of a couple of phone calls, and one site sold at 50% over the asking price, with a similar mark up agreed on a new build freehold industrial scheme.
It’s fair to say that the concentration of more demand in the industrial and land sectors is driving up prices at a level scarcely seen.
From a business point of view then, property sales in the right areas performed very well in 2021, exceeding expectations.
Looking forward to 2022 I can’t see there being any significant change in that. If good quality freeholds and investment sales come to the market, they will sell. I think the challenge for commercial agents will be a lack of stock becoming available. Like this year landlords are sitting tight with their property investments, and there has been relatively little new build in the industrial sector to fulfil demand.
One additional area of interest where we may see more activity is in the build to rent sector, whereby some of the larger investors and pension funds are putting their money into rented schemes, which are seen as a strong long-term investment opportunity. We’ve had success with a number of schemes in this field, both in terms of vacant sites with planning permission and a variety of completed developments.
We have invested significantly this year in terms of a new office move back in January into larger premises that have been fully refurbished and redesigned and I have to say provide us with a fantastic and spacious working environment. We sincerely hope we will be able to invite clients in throughout 2022 as we now have excellent meeting facilities.
With an eye to future growth we’ve also undergone a rebrand and have a new website, and expanded our already fantastic team with a host of new appointments. These include an opportunity for a modern apprenticeship in the form of Carys Hughes, the vastly experienced Kerry Morgan who joins us from the legal profession, and a full-time digital communication and marketing co-ordinator in Amey Hellen.
Social media marketing is an essential part of our toolbox, and that is borne out by the fact that many of our deals agreed throughout 2021 have been on the back of the much greater reach we have had with that, so it was an investment well worth making.
We end 2021 well placed to go into 2022 in terms of our commercial agency offering and other services such as bank and development valuations and other professional work.
We are diversifying our range of services and broadening our clients across both the private and public sectors and look forward to 2022 with the aim of further recruitment of more valuation surveyors and other fee earners.
Are you looking to dispose of commercial property or land, or perhaps you are looking to move into your next commercial property? Make sure you contact us in the New Year on 01332 292825 or commercial@bbandj.co.uk.
