A commentary from the Team at Naylors Chartered Surveyors.

It has now been three months since Naylors moved into their new centralised head office at Hadrian House and it has been an interesting quarter. And, whilst the general economic outlook has not improved since March, the Naylors’ team believes that it is not doom and gloom.

Fergus Laird, head of the practice’s Office Team reports a significant number of new prestigious instructions across the region including 45000 sq ft at Baron House, 41000 sq ft in Hadrian House Higham Place, both Newcastle; 100,000 sq ft at Cobalt Business Exchange and 20000sq ft in Innovate House Balliol Business Park to name but a few, with many more quality instructions just received and being processed. Also the team has been instructed by a substantial North-East based company, potentially wishing to acquire up to 45000 sq.ft. of office space on Newcastle Quayside. To service these instructions effectively Fergus has taken on a new member for the team, Alastair McGillivray. Formerly with Storeys SSP, Alastair has much experience in the regional office market.

On the investment side, the sparkle has undoubtedly gone and there has been a general moving out of yields. However, according to Gavin Dawson, there is still strong demand from equity backed rather than debt backed purchasers. He cites, as an example, one particular practice client who is still very much on the acquisition trail having recently completed on a substantial retail parade in Sunderland City Centre.

In the industrial sector, companies involved with the oil and gas industries are experiencing boom times and, whilst all clients are aware of the problems, developers are still seriously progressing plans and occupiers continue to make enquiries. According to Keith Stewart “New instructions are coming in, but there is likely to be a lack of new speculative product in the coming year. This is due to a combination of tighter funding, coupled with the unfortunate effects of Government policy, which are producing higher costs and risk through the introduction of the punitive Empty Property Rating and the requirements for Energy Performance Certificates.”

EPCs are also an issue in the area of asset management as businesses try to get to grips with the requirements of this leglislation. The main concerns seem to be how the EPC will affect both the letting and sale of new and second hand space and how stringently the certificates will be enforced.

Angus White believes the challenge of the next six months will be to assist and manage businesses in difficulty and he sees the retail sector as being the most exposed. “Naylors offers a conciliatory and flexible approach and will work in cooperation with landlords and tenants to help minimize the possibility of company failures. We believe this is important because a failed business can have a massive effect the cash flow of the landlord whose property is being leased, not just in terms of a loss of rent, but also because vacant properties now face full void rate charges, in terms of asset management.”

In broader regional terms, Bill Naylor believes there is a need to identify and bring forward new sites for industrial development, as well as better quality sites for social housing and  that the public sector should continue its investment in transport and infrastructure, despite market down turn.

He also feels that, given the down turn in the owner occupied market and the fact that the region’s house builders are looking to reduce new starts and land holding generally, now is a very good time for the social sector to move forward, take advantage of a weaker housing market and start looking to provide the right house type and mix in the areas of most need.

On a more personal business note, the quarter has seen Naylors employ a further two new surveyors, and they are currently recruiting a third. It has also seen Keith Stewart take on a new role as head of the practice’s Industrial Department while Bill Naylor has moved across to lead the company’s Consultancy Team.