Shortage of availability sparks growth in Norwich industrial market values
PUBLISHED: 09:36 05 June 2018
James Allen, senior partner at Roche Chartered Surveyors, considers the effects of reduced supply of commercial property in Norwich.
The market for industrial and warehouse premises in the Norwich area has now fully recovered from the prolonged impact of the recession that beset the market for the first half of the last decade.
As demand has increased, availability of premises throughout the city has fallen markedly.
The initial improvement in capital values has now been followed by an improvement in rental values with an upward trend being evident on most estates where there are regular lettings.
Roche has been monitoring the availability of industrial and warehouse units in the Norwich area of greater than 10,000sq ft for several years.
In November 2013, there were 17 available buildings providing a total of 473,973sq ft of available space. In 2017, this had reduced to eight available buildings totaling 167,363sq ft, representing the lowest level of availability for five years.
There are currently 10 available buildings totaling 182,115sq ft.
As a result of the combined effect of improved demand and reduced supply, there has been sustained increase in rental values in the last three years.
This is reflected in the headline rents achieved in the five significant lettings in the Norwich area in the last 12 months at Union Park, Burton Road Business Park, two units at Barnard Road, Bowthorpe, and another at Francis Way, also Bowthorpe.
These lettings clearly establish a trend of rents in the range of £5.50 to £6 per sq ft, which shows a good level of rental growth, particularly bearing in mind the age of many of the units.
With a more buoyant market and a sustained trend of improving values, there is now a better prospect than at any time in the last 10 years for developers to foresee viable investment in new industrial and warehouse units in the Norwich area. Hopefully, that’s the 20:20 vision for the year 2020.