Column for Devon Life
Chris Ryland, Managing Director of Stratton Creber Commercial in Plymouth, gives his analysis on the county’s commercial property market and an insight into commercial property investment in 2017.
Devon is the place to invest in commercial property. That’s according to British Land, the owners of Drake Circus in Plymouth.
The real estate investment trust has snapped up the primary trading pitches of New George Street, Old Town Street and Royal Parade Estate in Plymouth City Centre.
The purchases give British Land a prime stake in Britain’s Ocean City and a unique opportunity to manage and enhance a broad slice of the city centre to create an even more accessible and attractive place for local people to shop, eat and be entertained.
Anchored by Debenhams and House of Fraser, and home to other major names including Tesco, TK Maxx and Nando’s, the 4.65 acre site comprises 583,700 sq ft of shops, 12,000 sq ft of upper floor office space and 54 car parking spaces.
The site is strategically situated between Drake Circus and British Land’s £40 million Drake Circus Leisure development where construction is set to begin next year.
Due to open in 2019, the 100,000 sq ft Drake Circus Leisure scheme comprises a 12 screen Cineworld cinema and 14 restaurant units, a number of which have already been pre-let to some big names new to the city.
This is an exciting time for Plymouth with one of the largest real estate trusts in Europe taking control of such a sizable prime space in the city centre and I am sure we will see some significant changes proposed over forthcoming years.
It has been almost a decade since we have seen any speculative office development across the county. While activity levels differ in Exeter and Plymouth, it is encouraging to see both cities’ science parks actively progressing expansion plans.
At Plymouth Science Park, work is nearing completion on a £7million business hub, which developers claim will be the most hi-tech in the South West. Set to open in early 2017, the new building, One Research Way, has been specifically designed as a centre of excellence for e-commerce, digital creative and life science businesses. This will create an additional 30,000 sq ft of ‘grade A’ office space, taking the total park size to 130,000 sq ft. Encouragingly, seventy per cent of the new development is now pre-let to two occupiers.
The build has been made possible by collaboration with Plymouth University, the Heart of the South West LEP (HotSW LEP).and Plymouth City Council to secure the capital funding.
There is more good news in Exeter where, in addition to the Met Office HPC complex, construction is about to progress with a further two buildings and 18,500 sq ft of new office and laboratory space at Exeter Science Park.
The new two-storey buildings will be funded through a £4.5 million Growth Deal 2 grant from HotSW LEP.
An impressive construction will also house the Met Office’s new supercomputer which will enable more sophisticated weather and climate models to assist the UK’s resilience to extreme weather events.
Increased investor confidence and improved IT infrastructure across the county is fuelling an exciting commercial market in this part of the world.
For the smaller investor, low interest rates and modest returns on cash in the bank make property an attractive proposition, but prospects in the residential market have been hit by recent legislative changes.
Individual residential buy-to-let landlords have already had to swallow tougher stamp duty land tax payments introduced earlier this year seeing investors paying an extra 3% on new purchases. In addition, removal of tax relief on mortgage interest and recently announced proposals for tougher mortgage affordability tests lie in wait next year. As a result, investors are likely to consider the commercial sector as a potentially profitable home for their money.
Unsurprisingly, we are seeing an increase in valuation instructions from investors considering their options. At the very least, those evaluating their portfolios may choose to spread the risk a little by including an element of commercial property.
Overall, investor confidence is high across the market and nervousness around Brexit appears to have been largely unfounded, with regional markets looking set to remain buoyant for the foreseeable future.
However, for those considering a commercial investment, I would always recommend expert advice being sought.
About Stratton Creber Commercial
Based in Plymouth, Truro and Exeter, Stratton Creber Commercial provides specialist commercial property advice throughout the South West.
The firm’s services include: agency, acquisition and disposal, property management, business rate appeals, property valuations, lease renewals and rent reviews, development, building consultancy and specialist services for the medical sector.
Evolving into its current format from a management buyout in 1997, Stratton Creber Commercial has grown from modest beginnings to become one of the largest providers of commercial property services in the region.