Partner Article

Is the commercial property deals market sustainable or heading for a slowdown?   

By Andrew Stoddart, MD at VIDA Architecture

Latest figures reveal that investment in Yorkshire’s commercial property market has reached its highest level since 2010 – up 91% to £354.83 million.

Property consultancy Lambert Smith Hampton’s (LSH) UK Investment Transactions report states that ‘God’s own county’ has secured record investment growth in the three months to the end of September – a huge surge on the second quarter and up 18% on the third quarter.

Year-to-date commercial property deals in Yorkshire now stand at more than £1.01 billion with the retail sector experiencing the largest growth, accounting for 67.5% of total investment at £239.54 million.

This doesn’t surprise me as we have seen significant confidence in our retail sector – notably Leeds’ ground breaking £350 million Trinity shopping centre which opened last year and the £650 million Victoria Gate which is due to open in the autumn of 2016. Other exceptional deals include Hull’s St Andrew’s Quay Retail Park which sold for £95.5 million and two Tesco stores in Halifax with a combined investment of £46.53 million.

This buoyancy in investment in Yorkshire reflects a national trend experienced by the UK commercial property sector with investment reaching £16.3 billion – a 37% rise on the previous quarter and 41% higher than during the same period last year.

However, it is the first time since 2011 that ventures in regional markets have overtaken those in London due to increased buoyancy and the price of assets.

The renaissance in commercial property deals is not only being driven by UK investors. Overseas investment is expected to increase by 60% this year, according to research carried out by Lloyds Bank Commercial in association with the Investment Property Forum (IPF). The study confirmed data on how overseas investors have overtaken UK institutions in becoming the largest owners of UK commercial property.

Figures collated by the Property Industry Alliance state that UK owned commercial property fell by 16% during the last 10 years to £75 billion, representing just under one fifth of the £385 billion invested in commercial buildings.

In spite of these positive statistics, I do expect the current level of return on commercial property investments in both Yorkshire and the UK to slow down during the next 12 months due to the upcoming General Election and a possible interest rate rise.

Do you think a General Election will affect commercial property investment? Will commercial property potentially be affected by an increase in interest rates?

This was posted in Bdaily's Members' News section by VIDA Architecture .