Commercial property experts in Kent believe that the upturn in business confidence is strengthening the case for speculative development, while recent planning regulation changes are in danger of leading to a shortage of small office premises.
The Kent Developers Group, made up of commercial and residential developers operating across the county, has suggested that the latest data from the Royal Institution of Chartered Surveyors (RICS) UK Commercial Market Survey, demonstrates that now is the right time for the county to push ahead with new office, warehousing and distribution development.
The RICS Q2 2014 survey suggests that the overall availability of commercial property declined at its fastest rate since Q3 1999 with a net balance of 34% more surveyors reporting shortages. There were also sharp declines in the availability of office (-49%) and industrial space (-42%).
James Speck, Commercial Property Chairman of Kent Developers Group, and the man heading up Kent Science Park, said: “With demand from businesses for commercial property returning, and interests rates still low, now could be the right time for developers to consider investing in speculative development.
“Across Kent we are seeing a growing levels of enquiries. However, the supply of modern space available for immediate occupation is at low levels and unless we build more, and quickly, the county could lose out on attracting new companies.”
The RICS survey highlights that recent planning changes, which has seen the drive to convert offices to residential, is leading to the prospect of commercial property shortages in the South.
The survey also found the south saw a rise in the number of transactions of commercial properties being sold with Permitted Development Rights (PDR) to be converted into residential properties – the highest level of any region.
Regionally, a net balance of 32% of South respondents said the activity was having a ‘substantial’ impact on activity, while 45% said reported it as having a ‘moderate’ effect.
In terms of supply, Kent has seen a 10% reduction in industrial property supply since July 2012, particularly in terms of small and large sized industrial units, according to Locate in Kent.
Available units over 100,000ft2 have fallen by nearly 45 per cent, and those available and ranging from 5,000-10,000ft2 have fallen by 23 per cent, during the last two years. In sharp contrast, demand for units of 5,000-10,000ft2 has increased by 175 per cent over the same period.
Paul Wookey, Chief Executive of Locate in Kent, said: “Small sized town centre offices are an important part of Kent’s property mix and we continue to see a growing demand for serviced offices by overseas businesses as the first step to planning their larger long term investment into Kent.
“While the conversions of former commercial offices may be making a much-needed contribution to the region’s undersupply of new homes, local authorities will undoubtedly become concerned if business growth can no longer be accommodated – and hopefully be more open minded to permitting commercial development.”