The key trends to watch in Norfolk’s commercial property market in 2018
- Credit: Archant
2018 is set to be another strong year for the commercial property market providing confidence is not undermined by the Brexit negotiations, according to a Norfolk property expert.
Guy Gowing, managing partner at property services firm Arnolds Keys in Norwich, predicts business confidence will remain high into the new year despite continuing uncertainty over the UK's future relationship with Europe – which will be reflected in rising rents and falling vacancy rates across the county.
'All sectors of the commercial property market are performing surprisingly well given the gloomy forecasts being put forward,' said Mr Gowing.
'Provided sufficient progress is made towards a trade deal with Europe, I believe 2018 will see confidence staying high, which is good news for property investors.'
Mr Gowing's predictions include:
Norwich's popularity as a retail centre will continue, and demand for retail properties will remain high from both national operators seeking representation in the city, and local, independent retailers. Vacancy rates, which have fallen over 2017, will remain below the national average. Capital values will remain strong, mainly due to low interest rates and a dearth of significant alternative investment opportunities, while high demand will keep rents at a healthy level.
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Market towns face a bigger challenge, but the picture is not consistent.
Rents for Grade A offices, especially in Norwich city centre and in the city's business parks, have the potential to rise further, after a strong 2017. This year has seen the best open-market lettings reach as high as £15.50 per square foot, and in 2018 that has the potential to rise as high as £18.
• Industrial and warehousing
Rents have risen by around 5% in 2017 due to the strong performance of SMEs, which can be accommodated in flexible units suitable for a range of uses.
Another factor has been the growth in the online retail sector, which has driven demand for warehousing and distribution centres. 2018 will see continued growth, with rents facing upward pressure, perhaps by another 5%.
But Mr Gowing's predictions came with a caveat.
'Confidence and investment performance could be impacted considerably if we don't see a competent and focused approach to the Brexit negotiations,' he said.