Healthy demand for office space helped the Truro and wider Cornwall commercial property market deliver a robust first half year performance, says property consultancy Alder King in its mid-year market report. The strong performance was achieved in spite of some investors and occupiers taking a cautious ‘wait and see’ approach leading up to the EU referendum and a lack of quality stock.
The report’s key findings are:
- Office demand at the mid-year point was up 18% on last year’s overall total and demand for space outside and on the edge of Truro improved, resulting in a small increase in headline rent to £9.50 per sq ft.
- The supply of office accommodation has however decreased to its lowest level for eight years. Much of the existing supply is secondary accommodation, above ground floor with no parking in the city centre, but with the cost of construction generally exceeding the value of the completed product, there is limited new development.
- There continues to be strong appetite for conversion of older stock to residential use as developers take advantage of the stronger economy and relaxed planning regime.
- The supply of industrial stock fell to its lowest level for six years. There is a shortage of new industrial units, particularly those offering good access to the A30. Rents remain steady for prime modern accommodation reaching £8 per sq ft for the best smaller units. There is increasing pressure for rents to increase due to the shortage of supply and the reduced availability of grant funding.
- The city’s retail and leisure market remains active. Vacancy rates in Truro increased in the first half of 2016 but the city continues to perform better than the national average. New out of town developments are being promoted on the Truro Football Club site and at West Langarth and further applications including food store proposals under discussion.
Tom Duncan, head of agency at Alder King in Truro, said: “We remain confident that the occupational market will continue to perform well in the second half of the year, despite the current political and economic uncertainty following the referendum result. The fundamentals of our regional economy remain strong. Truro, and the South West more generally, has limited supply which should help deliver continued activity, even in the short term, particularly in sectors where there is pressure on supply.
“The investment market is likely to remain challenging but the fundamental attractions of UK commercial real estate investment remain unchanged to both UK and foreign investors and, in time, confidence will return.”