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East Anglia Future 50

Divide widens between retail and industrial sectors – RICS

PUBLISHED: 09:54 27 June 2018 | UPDATED: 09:54 27 June 2018

Completion of Norwich’s Northern Distributor Road, which connects to the Southern Bypass at its easterly end, is a piece of positive news. Picture: ANTONY KELLY

Completion of Norwich's Northern Distributor Road, which connects to the Southern Bypass at its easterly end, is a piece of positive news. Picture: ANTONY KELLY

Archant Norfolk 2018

First quarter commercial property reports, released this month by RICS, reveal a growing divide between a struggling retail sector and a still healthy industrial sector.

Retail weakness has become more apparent across all parts of the UK over recent quarters and, over the coming 12 months, RICS quarterly report respondents anticipate capital values rising to a greater or lesser degree across all market segments, with the exception of retail.

Both prime and secondary retail assets are expected to see values decline, although the outlook is comfortably worse for secondary.

Capital value expectations for prime offices, meanwhile, have strengthened in each of the last two reports, with a net balance of +48pc, the highest return for two years.

Even so, respondents are still most confident in seeing prime industrial capital value gains over the year ahead (net balance +66pc).

Beneath the national figures, near term retail capital value projections are negative in every UK region/country.

Again highlighting the divergence between the sectors, near term industrial capital value expectations are positive across all areas. For offices, prices are expected to rise in virtually all parts of the UK.

In East Anglia, Roche Chartered Surveyors reported a major impact on retail and leisure confidence in the last three months.

Managing partner Sam Kingston said: “The general lack of supply across the office and industrial market has seen rents move in an upwards direction.

“The industrial/warehousing market remains robust in Norwich and across most of Norfolk, while the office market is more challenging, due to changing working environments.”

Guy Gowing, at Arnolds Keys, observed optimism in the main commercial property sectors, with demand for freehold buildings for owner occupation outstripping supply.

“The occupational leasehold office market has improved in 2018, despite the uncertainty generated by the disorganised Brexit negotiations,” he added.

Andrew Bastin, of Bastin Commercial, said: “The mixed-use development and investment potential arising from the completion of Norwich’s Northern Distributor Road, which connects to the Southern Bypass at its easterly end, is a piece of positive news amid Brexit uncertainty.

“That the western end is effectively a cul-de-sac is a disappointment; that transport planning decision will have to be changed so as to complete a more helpful orbital route for the city and outlying settlements.”

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