Despite the continuous decline in the UK economic climate the M25 office market enjoyed an increase in commercial property lettings for the last quarter of 2008, according to Knight Frank’s latest report. Commercial properties lettings increased by 10% in the third quarter for the M25 region and 9% in the M3 corridor. However, the M4 market experienced a decline in their final quarter, and was 13% down from their previous quarter’s figures.
The credit crunch has effectively turned the commercial property lettings business into a buyer led market, therefore this upturn is a welcome surprise for commercial property owners in the M25 region. Availability and supply of commercial property offices within these areas has decreased over the last six years therefore landlords are not experiencing the same pressures as other commercial property owners who are operating in these increasingly buyer led markets. There are still areas within the M25 region where oversupply is prominent however, and towns such as Bracknell where availability of retail commercial property is high are likely to experience the same downturns and economic pressures as the rest of the UK
Landlords throughout the UK are having to provide increasing incentives, inducements and discounted rental rates in order to survive the current downturn in commercial property sales. Things are unlikely to improve over the next year and a half and the economic situation is likely to put further pressure on landlords and commercial property owners with tenants likely to see further offers available to them over this time period.
Overall throughout the UK the office take-up market has declined with areas such as Bristol seeing new commercial property lettings figures fall to below their five year average. The London areas worst affected by the office lettings downturn are those where businesses operating within the financial services and hedge fund industries are especially prominent. The high profitability of these two sectors over recent years meant that lettings were more location than rent led, with businesses happy to pay over the odds for the right location. However, the increasing pressures that these industry areas are now experiencing means that many offices in prominent financial areas throughout London are being left either vacant or commercial property landlords have provided decreased rent rates and further incentives in order to keep their buildings occupancy rates up.
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Extract from Eyeworks New Zealand TV program NZ Open Home: “A guide to investing in commercial real estate.” Features Mark Withers, author of PROPERTY TAX and contributor to COMMERCIAL REAL ESTATE INVESTORS GUIDE by Peter Aranyi www.EmpowerEducation.com [Used with permission.]
Help answer the question about commercial property
What is the process in writing an offer for a commercial property?I am a residential realtor. I have a client that wants to purchase a $8 million property that is listed by another broker. Do I send the listing broker a "Letter of Intent" or a commercial contract to sign? When a letter of intent is signed by the seller and buyer, does it then go to a real estate attorney? And does the real estate attorney handle the rest? Need Help ASAP!!
About Author
Matt Grimes is a commercial property agent in London and has considerable experience in the industry after working in the commercial property sector for over twenty years. He has written numerous articles regarding the commercial property area and is seen as an authoritative figure in the industry.
