DUNCAN Brown, President of Greenslade Taylor Hunt, provides an update on the commercial real estate industry.
“In my 33 years as a commercial property surveyor, first in London and since 2003 in Somerset, I have experienced many changes in the property market.
“Although Covid in 2020 was officially recorded as a recession, there have only been two in my working life, the first lasting 1.25 years in 1990 and the second during the same period in 2008.
“Both had notable effects on the real estate market.
“However, although some sectors such as retail and leisure have had to change to meet demand, we have seen positive growth and commercial property has proven to be a good investment.
“We are going through uncertain times with high inflation, rising interest rates, historically high fuel prices and a cost of living crisis.
“To date, the commercial market has weathered this particular storm quite well.
“Here in the South West, prime retail in city centers has been hit the hardest during the pandemic, which has heightened problems with online shopping.
“We have seen a new lease of life in secondary retail locations as independent traders with more attractive offers taking opportunities at lower rents and hopefully eventually lower commercial rates.
“Transaction levels in the office sector remain quite low as they have been for several years.
“Working from home and shared offices are likely to be here to stay as businesses rethink their floor space needs.
“That said, the importance of being in the office, communicating with each other face-to-face and training new staff in a work environment naturally came to the fore.
“Rents and capital values have remained fairly stable for a number of years. Prime rents in Somerset are between £15.50 and £16.50 psf with non-air-conditioned second-hand accommodation between £8 and £12 psf, depending on location and specification.
“It is the industrial sector that is doing best with continued demand, where supply has been limited since 2018.
“Rentals for new build, retail and industrial units have recently topped £10 per square foot and capital values of £175 per square foot have been reached in Somerset.
“Investment in commercial real estate is strong with better returns than the residential sector.
“There are occupiers who prefer to own rather than rent and there is a noticeable shortage of commercial land, with owner/occupiers paying a lot of money for small sites.
provides an update on the commercial real estate sector.