UNCERTAINTY RETURNS TO COMMERCIAL PROPERTY
The General Election is one of a clutch of issues which has slowed down the commercial property market in and around Cambridge, says Philip Woolner of Cheffins. "After a rush of deals at the end of 2009 and the beginning of 2010, this Spring has been much quieter. The current uncertainty over who will govern Britain and how, the slow increase in economic growth and now Greece turning into a basket case, financially, are making businesses cautious."
Philip points out that it's just a year ago that the local market showed it had turned the corner. "At our May property auction two shop investment in Cambridge sold at encouraging prices and it seemed that Spring was here. That trend continued through until December. The current lower level of activity contrasts vividly with the local residential market which is booming."
A particularly bright spot is the retail property market. Cheffins has enjoyed a very active market which seems to have been free of pre-election jitters and more generally, retail investment properties are commanding much higher values.
What strikes Philip Woolner as a concern is, firstly, that the values of empty commercial properties are generally drifting lower and that businesses are still very focused on reducing costs. He adds: "Last year probably saw the soaking up, locally, of pent up demand among bigger organisations which were looking for signs of the economy at least stabilising if not improving. The impact of business rates on empty commercial property has had a major negative impact on value.
"Where clients have vacant commercial property we are advising them to be flexible on terms and, where appropriate, to add value by making improvements. Clearly, poorer quality property in unfashionable locations will struggle but we have found, acting for many local insolvency practitioners, that sometimes public auction is a positive way of stirring up the market and doing a deal promptly."
The result of the General Election will obviously determine the level of confidence of business owners but the reduction of Greece's debt to junk status has undertones for the whole of Europe, and that has been evidence by the behaviour of the stock markets across the world. But Philip emphasises that Cambridge has a varied micro-economy all its own and this will do much to counter national sentiment. But, as ever, quality sells in the commercial property market.
