The Teesside commercial property market looks encouraging for 2016, despite the continuing dip in oil prices, according to Dodds Brown senior partner Stephen Brown…
A lack of existing quality industrial units and employment land will continue to keep upwards pressure on industrial property prices throughout 2016 and beyond, while prices in the office market should remain stable after some adjustment following the oil price reduction.
But the outlook for the Teesside commercial property market this year is encouraging. The lack of availability of smaller quality industrial stock is already putting upwards pressure on rents which are presently moving up towards £4.50psf.
In the past six months we have experienced increased take up and demand for industrial units across Teesside and throughout the Tees Valley and we expect this to continue in 2016.
In November, we let on a 15,170 sq ft industrial unit at Riverside Park, Middlesbrough, to Park Electrical Distributors as the location for a new branch, creating eight new jobs for the town.
A further unit of a similar size has gone under offer, with only one unit now remaining at the development.
We are working closely with public sector bodies, developers and landlords to bring new development opportunities, and new and refurbished properties to the market, but with a limited number of shovel ready development sites in the area, upwards pressure on prices of industrial units of all sizes will only increase.
The start of work on Teesside Advanced Manufacturing Park in Middlesbrough, where 70,000 square metres of office, workshop and laboratory space, hybrid and light industrial units, and larger custom designed buildings are planned may go some way to alleviate this.
There was some adjustment in the office market in the second half of 2015, with some occupiers involved in the offshore energy market divesting themselves of space, but this provided opportunities for other occupiers to acquire better quality offices or to consolidate operations in one building.
This has been particularly the case for freehold properties, as attracted by low interest rates and the increasing willingness of the banks to lend, some businesses with cash in the bank looked to buy property.
Recent changes to the SIPPs rules also make freehold properties very attractive, as many company directors seek to purchase a property for their business through their pension schemes, and with the reduction in tax breaks and hike in stamp duty rates for residential investors, 2016 could also see increased interest in switching portfolios from residential to commercial property.
Senior Partner, Dodds Brown LLP