Things have become a
little more settled as the new Government announces its plans for law change
and parliament is officially re-opened. The industry plods along enjoying
relative growth and optimism but still a vision of caution as we see industry
known names succumb to administration.
There should be a
renewed excitement about the market as demand continues to rise but with
Grade-A office supply being extremely short does it mean we should simply throw
up more high rised glamorous buildings or think a bit more innovatively.
If you look out
across most Northern cities, and I’m sure this applies across the country,
there is an abundance of buildings in good locations that simply need a bit of
TLC (or a lot of TLC depending how half empty or full your glass is). Rather
than admit defeat and look for ways to offload these older assets landlords
could and in some cases are attract modern investors by creating innovative
space from this second-hand space.
Maybe my love of the
older building makes me bias here but surely with demand for Grade-A office
space soaring exponentially it makes sense. The challenge for the landlord is
how do you create a space that attracts an occupier – simple, you need to make
it a resilient future proof site making technology, design and innovation at its
heart.
If you take say a
design or architectural firm, having a more unusual office building can be a
big attraction and combining this with good incentives will attract the right
people. Thinking about how you can work with potential tenants to create a
space that works for them. If I think about my client base there are some in
modern office buildings in prime locations but a growing proportion are in more
abstract buildings which contain a lot of character.
My overriding advice
is make it work for your occupier and by doing so it will work for you.
But why is there a
need? Well the evidence speaks volumes with new lending to commercial property
reaching a six year high in 2014 driven by non-traditional lenders entering the
market to fuel the current commercial real estate market. I read recently that
over £45bn of loans were granted in 2014 compared to £49bn in 2008 – hopefully the
market is in a safer place now though than back then.
With the commercial
real estate market recovery well underway and as older outstanding loans
reduced significantly it does create a much more fluid and exciting market
place. Creating a mixture of new and renovated old will add character to the
city and provide flexible working spaces for all types of business.
Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to
property and construction.
Enjoy
the weekend
Lee
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