Gloucester's commercial property market delivers strong 2015 performance despite structural lack of supply
PUBLISHED: 15:52 25 January 2016 | UPDATED: 15:52 25 January 2016
Gloucester's commercial property market performed strongly in all sectors throughout 2015 although there is increasing concern about a structural lack of supply in the county, says Alder King in its annual Market Monitor report. This picture is replicated in many centres across the South West including Bristol, Exeter and Swindon.
Demand for both Grade A and secondary offices in Gloucester was strong throughout last year, with a steady number of transactions. Total take-up for 2015 was 145,000 sq ft, in line with 2014’s figure but 19% above the five year average, reflecting increased occupier confidence. As a result of improved take-up and the conversion of redundant buildings to residential use, the level of supply for office accommodation dropped to 140,000 sq ft, an 18.6% fall on the five year average. Much of this supply is secondary space and there are no proposals for speculative office development in the near future.
Gloucester’s industrial market recorded take-up of over 400,000 sq ft, in line with 2014’s figure but higher than the five year average. This included the purchase of the three speculatively constructed buildings at Gateway 12, Quedgeley West and Stanley Court on Waterwells Business Park. The supply figures for 2015 show an increase from 250,000 sq ft to 400,000 sq ft, although this includes the 286,000 sq ft former St Ivel building on Gloucester Business Park for which strong interest exists. Essentially supply remains at a very low level. St Modwen is responding to the lack of supply with the speculative construction of another building of 40,000 sq ft at Gateway 12 which will be available later this year. In December 2015 Goodman handed over its 52,600 sq ft (4,887 sq m) headquarters building to UK nuclear energy specialists Horizon Nuclear
Power. The new facility was commissioned to support Horizon’s aim of developing a new generation of nuclear power stations to deliver stable
and sustainable low carbon energy. Staff will move into the property in early 2016. Goodman was advised by Alder King and Strutt & Parker.
Adrian Rowley, partner at Alder King’s Gloucester office, said: “The constrained supply in Gloucester, demand pressure and the prospect of further rental growth increasingly support the case for further development. New speculative developments and good quality refurbishment schemes are scheduled to come forward in 2016 and will deliver much-needed stock.”
The South West remains attractive to investors looking for value outside London, with Gloucester securing £32.7 million investment in 2015, predominantly in the retail warehouse sectors. The largest retail warehouse transaction was Picton Capital’s purchase of Gloucester Retail Park from Brockton Capital for £14.65 million at a NIY of 6.9%.
Gloucester’s retail and leisure market remained active through 2015, with improving demand across the four key streets of the city centre and out of town at Triangle Park where Costa Coffee’s forthcoming arrival has fuelled strong interest from other national chains.
Across the wider South West:
. 2015 regional office take-up was 1.9 million sq ft compared to 2.2 million sq ft in 2014.
. Supply of office stock across the region fell 15% compared to 2014 to 3.2 million sq ft, a figure 30% below the five year average.
. 2015 regional industrial take-up increased 24% from on 2014 to 5.9 million sq ft of take-up, up 18% on the previous year.
. Industrial supply fell 40% on the 10 year average to 4.3 million sq ft across the region.