THE FUTURE LOOKS BRIGHT FOR THE COMMERCIAL MARKET IN 2007

2007 is met with great anticipation and enthusiasm from the commercial property industry. The last three years have seen unprecedented levels of growth, and increasing demand from occupiers and investors alike.

This growth is likely to continue throughout 2007 due to a combination of factors including the poor performance and uncertainty of other investment classes, and even despite the recent increases in interest rates, the historically low levels.

This is further fuelled by the banks and lending institutions’ keenness to lend money secured against commercial property, and this shows no sign of abating.

This has already resulted in the first part of the year showing a number of freehold sites and buildings being sold under competitive bidding situations, with guide prices being exceeded.  This is likely to continue.

The latter part of 2006, and this has continued into 2007, has shown an increased buoyancy in the occupational markets, particularly for Grade A office space.  There have been many lettings on the East Norwich business parks, which have been widely documented, but now there is a resurgence in the City centre market, with two principal schemes being launched, that of Duke’s Wharf by Targetfollow, and the edge-of-town scheme, Whitefriars.

The warehousing market is also showing great signs of buoyancy with enquiry levels up; demand for buildings, again for owner occupation, being high, and many national chains of trade counter operators seeking to secure a presence in Norwich which is a strong trading centre.

The only sign of caution on the horizon is that of the varied trading figures reported by retailers over the Christmas period.  The retail property market has been extremely buoyant over the last few years; however, the effects of high levels of consumer borrowing and concern on a private level of increasing interest rates has stalled the consumer spending boom, and some retailers are suffering.

This may lead to an increase in the number of shops that are available which is not all bad news.  This will enable new and entrepreneurial retailers to secure a footing on the high street which will help to keep the diversity of city and town centres, and stop them from becoming clone towns.

In conclusion, the location commercial property market remains bullish and this will continue to be an important ‘driver’ of the economy as a whole.

Guy Gowing
Managing Partner
February 2007
guy.gowing@arnolds.uk.com

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