The survey reports that 12 month capital value and rental projections have now moved into negative territory, illustrating the heightened sense of caution which is visible across both investment and occupier sides of the market.
Notwithstanding this, the majority of the doom and gloom is centred around London, with the Capital seeing a net balance of -35% more surveyors anticipating a decline in all property prices over the next year. On the flip side, the prime regional markets are supposed to hold firm. According to the report; “Back at the UK-wide level and despite a softening demand backdrop, the supply of property for investment purposes still remains tight…In keeping with trends over much of the past two years, the lack of supply remains most apparent in the industrial sector… Prime industrial assets are the sole exception, where the outlook is flat for the time being (rather than negative).”
This is certainly the findings of Cheffins in Cambridge. Philip Woolner, head of Cheffins commercial property and the only Cambridge-based surveyor to comment within the report says:
“The lead up to the Referendum saw a slowing of demand in the market across all sectors, especially in the prime markets. The Brexit result has already led to transactions falling away in some areas of the market but its real impact will only be seen in the coming weeks and months. Cambridge is resilient and our lack of supply of prime industrial units should mean that prices hold up in the face of high demand, Brexit or no Brexit.”
As an example, Cheffins let a large industrial unit at Newmarket Business Park, in the weeks following the Referendum at a premium price level. Unit 8B was let to DistributionNOW – a multinational distribution company, founded in the US. Taking over 7,000 sqft of high specification industrial and warehouse space, Cheffins sealed the deal at £52,500 per year, £7.50 psf.
According to Philip Woolner:
“This deal shows how in the weeks following the Referendum, sentiment remained strong around the Cambridge region, particularly in the industrial market. The price achieved on the lease of the building at Newmarket Business Park was similar to that which could have been achieved pre-Referendum. We will soon be bringing to the market a premium selection of industrial units in north Cambridge which I believe will achieve strong yields, despite Brexit uncertainty. Transactions are continuing to happen at a much better rate than expected, mainly due to banks continuing to lend, the stock market holding strong and businesses being in the same position as before Brexit.”