Published 07 Feb 2019


Tom Holloway

As 2019 begins, Holloway Iliffe & Mitchell director Tom Holloway looks back on some of the significant features of the South Coast market over 2018.

The two principal themes seen repeatedly throughout the year were the strength of the freehold market and specific interest in industrial/warehouse space, particularly in smaller and mid-sized units. In terms of leasing activity, industrial space was strong, but offices less so and this was especially evident in the more rural towns rather than city centres. One example of freehold over leasing, came at The Potteries in Fareham, where well-appointed offices of 4,000 sq ft had been available to lease for some time with little interest. Appointed as joint agent, our recommendation was to offer the property for sale which resulted in an offer and exchange within a month.

Overall the second half of the year was significantly better that the first half, perhaps with the exception of retail which continues to be hit by the online market.

Across the South Coast the focus during 2018 was very much on the industrial sector with several speculative developments either recently or close to completion, including Merlin Park in Portsmouth, Dunsbury Park and Velocity in Havant and Daedalus Park in Lee-on-the-Solent. A number of pre-lets at Phase II of Daedalus Park were completed in the final quarter of the year with just a couple remaining. The units themselves are not due for Practical Completion until the spring.

Another area that caught our attention during the year, was the enthusiasm of investors to continue to transact for the right property in the right location. Innovative deal structures, including in some cases incentives, to suit occupier demand as market conditions continue to fluctuate, are becoming more prevalent.

When viewed as a whole, the market continues to be active, whether in spite, or because, of Brexit it is difficult to know. Businesses are still growing, and with that growth can come the need to move, but sometimes occupiers overthink the move option when they could repurpose their existing space. Where the decision to relocate is based purely on a lease event, the result in several transactions we have been involved with, has been a successful renegotiation of a new lease, a revised office plan with a new fit out to give the additional space originally required.

When it comes to development land, the supply is becoming more limited. Land is not only expensive in the region, but the cost of successfully developing it, has increased substantially. This has led developers to be more cautious with land purchases to ensure that they can achieve a successful planning and build out with as few risks as possible.

2019 is already busy, with a number of transactions in solicitors’ hands. There is without doubt a certain amount of caution based on the uncertainly of Brexit, but we are optimistic that the South Coast is quite well placed to weather the storm and more widely the market won’t stagnate to the same degree it did a decade ago.