Cornwall’s commercial property market proved extremely resilient in 2017, says Alder King in its latest Market Monitor report, in some cases outperforming market expectations.
Demand for commercial property increased, with industrial demand reaching its highest level in over ten years. However, actual take-up of space was constrained by the lack of good quality immediately available stock, limited new development and limited availability of sites able to satisfy larger requirements.
The ongoing and increasing shortage of well-located quality office and industrial space is a concern, says Alder King associate Tom Duncan.
“Supply levels across the county have been falling for several years now and are becoming increasingly acute,” he said. “Available industrial accommodation dropped by 43% compared to 2016 and now stands at its lowest level for nine years.
“New stock is urgently required but without grant funding new development has generally been unviable.
“The good news is that last year we saw rental growth in the office, industrial and leisure sectors which, if this trend continues, bodes well for future new speculative development. A new rental high of £9 per sq ft was set for well-located modern industrial accommodation while in Truro city centre prime office rents jumped from £11 to £13.50 per sq ft. The city’s leisure market also recorded a significant rental increase, up from £20 to £25 per sq ft, despite limited activity in the sector over the past year.
“Further upward pressure on rents is widely expected in 2018. This should narrow the gap between construction cost and completed value and in turn encourage more new development across the county.”
Truro’s retail and leisure market performed well in 2017, attracting a number of new retailers. Confirmation last April that work will commence on a 6,000 capacity Stadium for Cornwall was welcome news and will provide much-needed multi-purpose sports, leisure, education and business facilities.
2017 also witnessed a record volume of investment transactions, mirroring trends nationally. In excess of £10.1 million of assets were transacted in Truro, with the largest being the sale of Lemon Quay House.
Looking to the year ahead, Duncan said: “We anticipate another strong performance from the region’s property market this year.
“The occupational market remains buoyant, with strong demand across many sectors but particularly from the distribution warehouse and trade counter sectors. We hope to see new developments being proposed to meet this demand.”