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LATEST REPORT REVEALS RECORD ACTIVITY IN CITY OFFICE MARKET
BY OLIVER ASTLEY
OASTLEY@DERBYTELEGRAPH.CO.UK
19 February 2008
Positive notes were sounded when commercial property agent Innes England launched the first of its annual market reports at Pride Park Stadium.
Despite the tightening of global credit conditions and problems experienced by commercial property funds, there were glimmers of hope within the agent's Market Insite publication.
It collated statistics covering the office, industrial and retail property market between 2003 and 2007, giving a comprehensive overview of the commercial property market in Derby and the East Midlands as a whole.
The launch event was attended by development companies, representatives of law firms, commercial property agents and banks.
Managing director Robert Hartley introduced the event and went some way to allaying fears over the future of the commercial property market.
He said: "Our experience is that there is good demand from owner-occupiers and tenants for well-located and well-specified premises.
"The investment market has slowed at the top end, interest rates are falling and, during 2008, prices are likely to better reflect the risks and rewards of owning property."
Following Mr Hartley's introduction, Innes England director Nick Hosking analysed the commercial property market in 2007.
He reported record levels of activity in Derby's office market with 220,000 sq ft of space let. However, he made the point that these results were skewed by a number of very large deals, including Rolls-Royce taking 75,000 sq ft of office space at Jubilee House and Delta Rail occupying 50,000 sq ft, all on Pride Park.
At the end of 2007, there was 600,000 sq ft of office space available in the city but what was described as a serious lack of large areas, with no grade A offices over 15,000 sq ft. However, the situation will change as developments in the pipeline are completed.
"The Point, a 12-acre site on Pride Park, will have the capacity to accommodate office developments of up to 58,000 sq ft and space has already been taken by Carter & Carter, Intercounty Properties and Ramada for a 140-bed hotel," reported Mr Hosking.
Another cause for optimism is the number of large-scale office developments in the city centre.
However, Mr Hosking warned that the lack of dedicated parking in the city would prove of concern to potential occupiers and that rental growth is still lagging behind Leicester and Nottingham.
Like the office market, the industrial sector also broke records in 2007 with 525,000 sq ft of industrial space taken, up 70 per cent on 2006. The biggest deals involved logistics company Wincanton taking 200,000 sq ft, Network Rail taking 50,000 sq ft, Daher Sawley occupying 78,000 sq ft, and Ulogistics moving into 75,000 sq ft distribution premises.
Levels of supply look set to increase in the industrial sector in the coming year, with the 10-acre Axion Business Park, Revelan's nine-acre Victory Court scheme, and bigger projects at Sinfin Moor and the Derby Logistics Park, measuring 150 and 140 acres respectively.
Mr Hosking said: "Work on the Derby Logistics Park site has already started, and there will be over two million sq ft of industrial space with the potential for one building of 1.1m sq ft."
Innes England reported that yields in the investment market remained low throughout 2007, partly due to concerns over the credit crunch. That said, an increase in activity is needed this year to give a better indication of where yields in the investment market lie.
The effect of Westfield pushed headline rents in Derby up to £170 per sq ft, in comparison to £210, in Leicester and £250, in Nottingham.
Derby Cityscape chief executive John Cadwallader, outlined the regeneration agenda for the city and Lloyds TSB senior economist Jeavon Lolay spoke on the economy.