The Covid, current economic position and upcoming Brexit situations have created a great degree of uncertainty in not only everyone’s personal lives but also their businesses and with uncertain times it is often the case that people and companies put off making the big decisions. This would certainly seem to be the case for the large national and international companies but for SME’s the market particularly in Hertfordshire is active.
The office market is still probably one of the most affected of all the sectors. It is very difficult currently for companies to know what their space needs are in the short and medium term. This has meant that if firms have lease events, they are uncertain what decisions to make now.
The larger companies seem to be taking a longer-term view and not pushing the button on relocation and sizing changes. However, for SME’s the financial impact creates a more short and medium term problem and they have to make property decisions accordingly.
There also hasn’t been the mass exodus out of central London which was reasonably anticipated at the start of the pandemic. Again, mainly due to the larger companies holding fire on relocating decisions.
For offices in Hertfordshire there are almost no transactions over 2,000 sq ft with very low numbers of requirements. Below 1,500 sq ft the market has been quite busy with multiple deals completing and going under offer. This is the case both for leasehold and freehold. The retail market shows a somewhat similar pattern with seemingly the larger chains struggling more and therefore not taking new properties, reducing store numbers and renegotiating lease terms with landlords of their existing premises.
Industrial property seems to have come out of this period relatively unscathed and therefore is looking very attractive to investors and developers. Logistic companies have performed well over this period and it would seem likely this will continue. This has pleased investors and developers are looking at upcoming sites to see if they can replace offices with warehouses.
Whilst it isn’t business as normal, it is a two tier market with sub £50,000 per annum rental properties busy and transacting together with sales of sub £1,000,000. Above this level the market is still relatively on pause. Whilst rents and prices haven’t dropped yet as supply is still not increasing dramatically this will change.
Landlords starting to incur empty rates and with mortgage payments will soon have to decide whether to drop rentals and offer more incentives for vacant properties and landlords negotiating with existing tenants are likely to work very hard to keep them in place. This will lead to a reduction in net rents and prices but focussed on the larger more ‘prime’ properties.
For further information please contact Matthew Bowen at Aitchison Raffety on 01727 843 232, firstname.lastname@example.org.