Hiatus will leave us short of space
June 2nd, 2009.
There have been some encouraging signs that some end users are willing to look at space once again after sitting on their hands for 6 to 12 months ago.
That said general enquiry levels have dropped over the last few weeks to a level we hope has now stabilized. It is evident the void numbers on small industrial space in the region has increased in the market whereas 6 to12 months ago space of this size, particularly in prime industrial areas, was hard to source.
Quite a number of tenants are going out of business or serving notices on landlords to quit under the terms of their flexible tenancy agreements.
The banking crisis has not helped the situation with money not getting filtered through the system to keep small businesses afloat. We are confident though that void levels for this type will decline once money starts filtering back through the system and confidence comes back to the consumer.
The regions industrial space over 20,000 ft2 continues to be difficult and whilst some landlords and Funds are particularly flexible on both rent and lease terms in order to secure a tenant and in a lot of cases to mitigate the rates liability, some occupiers are less enthusiastic as they do not know what lies ahead in the short term.
Rent reviews and lease renewals within some landlords portfolios will no doubt be damaged by what is happening in the current climate but landlords and tenants are trying to see this difficult period through.
If we try and look beyond the current issues we face and to new industrial development which will no doubt be in demand, where will this take place and when?
Some demand is evident from places such as Buildings for Business’ new Queens Court scheme on Team Valley, Gateshead, where all the industrial space is now let, sold or under offer.
We will be guided on this only when the banking system eases and confidence returns and developers will again look at those potential schemes that were put on hold. When they do, there will likely be a lack of supply until 2011 and beyond.
Keith Stewart
Director
