Across the UK the retail and leisure and hospitality sectors have all suffered extensively from both the pandemic and its associated effects.

While much of the retail sector remained open during the second and third (autumn and winter) lockdowns, leisure facilities were closed until July ‘21*.

In April BRC-LDV Vacancy Monitor reported the overall retail vacancy rate across the UK had increased to 14.1% in Q1 of 2021, which was 1.9% ahead of the same point last year.

By June, retail sales values had reached 10.6% more than pre-pandemic levels. Over the summer months the return to ‘experiential’ shopping was slower than online sales, which remain substantially higher than before the crisis - 40% ahead of February 2020 levels – and now represent over a quarter by value of retail sales.

The consequences of the pandemic have hastened a decade long shift in consumer behaviour and are clear across Kent’s high streets and retail parks.

Over the year, major brands disappeared, pushing up the number of vacancies. With the pre-pandemic shift to online shopping accelerating, and a limited return to physical retail, all Kent towns experienced an increase in vacancies resulting in lower rents and greater lease flexibility.

There is more evidence of enhanced landlord incentives, flexibility on lease lengths and terms and a growing number of retailers agreeing rents paid monthly in arears*. ‘Covid clauses’ are becoming commonplace, with agreed rent reductions if the store is forced to close.

1887 The Pantiles, Tunbridge Wells, Dandara Home Counties

Ground floor retail space at 1887 The Pantiles, the new unique landmark development in Tunbridge Wells.

Average prime Zone A high street rent in Kent has fallen 15% over the last 12 months, driven primarily by the

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Gail’s Bakery at Bligh’s Meadow, Sevenoaks

larger retail centres, which felt the loss of national retail brands more acutely.

Tunbridge Wells prime Zone A retail rents are the highest in the county at £111.50 per sq ft (£1,200 per m2), but still reflect the sharpest fall in the county of 30% over the past 12 months.

There were a number of notable investment transactions in Kent

New lettings reflect a shift towards local shopping and experience, including a number of gyms and hospitality lettings. The latter is best illustrated by The Light leisure complex, an eight-screen cinema, nine-lane bowling alley, retro arcade, diner and three bars, which opened at the Spirit of Sittingbourne regeneration scheme in May.

Supermarkets survived relatively unscathed with more developments planned in Maidstone, Ashford and Kings Hill, as well as a new Sainsbury’s that opened in Staplehurst in March.

The out of town market is difficult, though there have been some lettings with Sofology, Decathlon (a first for Kent) and Hobbycraft all opening new stores. Ashford Designer Outlet has seen a strong return to their outdoor environment and has almost fully let its new extension. Bluewater has been hit with many occupiers retaining a presence, but downsizing units. However, there have been some significant lettings too including Zara Concept Store; ProCook, Sleep8, Moyenne and Amazon who recently opened a 3,500 sq ft unit.

Neil Chatterton, Managing Director of Caxtons was keen

to point out that while high streets across the county are changing, they are still worth investing in.

“We have seen continued interest in investment opportunities. In January, we completed on the investment sale / purchase of 21 High Street Broadstairs (3,410 sq ft) from Mojon Investments Ltd to Nilacraft Ltd for £423,000 and in February a private individual agreed the sale of 61/61a Mayplace Road East, Barnehurst, Bexleyheath to Kova Workplace Ltd for £305,000.

“Investment has remained active across the Kent retail market and the largest was by Realty Income Corporation who paid £44.95m for the Gillingham Asda superstore at Pier Approach*.

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Neil Chatterton

“Although the past year has been challenging for the retail sector, continued investment reflects the long view, and while high streets of the future may look and feel different, there remains a belief that it’s still worth investing in.”

For more detailed information click here for the retail sector performance data and narrative.

To view the full report visit Caxtons 2021 Kent Market Property Report or download a pdf version here.

Caxtons recently won the EGi Most Active Agent in Kent award for commercial property transactions.

*For further information, please refer to the retail section of the Report.

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The Powerhouse, Dartford (credit: Bericote Properties)

The industrial and logistics sector in Kent experienced record highs during 2020, and it is gratifying to note that – according to this year’s Kent Property Market Report - 2021 is repeating that pattern. Much of the growth is outside the M25 and deeper into the county, which is welcome and hopefully a trend for future years.

Kent has enjoyed a 9% increase in average annualised prime industrial rent over the past three years with a total increase of 48% over the past five-years.

Mark Coxon, Head of Commercial at Caxtons said “Anyone with a knowledge of the Industrial and Logistics sector in Kent can confirm, the 2021 Report findings are correct in that ...continued expansion and upgrading of facilities by retailers, parcel delivery operators and third party logistics businesses has driven the pace of growth.

“An increased demand for storage - exaggerated by an exponential expansion in online shopping, plus the pandemic and a recent shortage of HGV drivers across the UK, Europe and beyond – means that any new large Grade A floorplate is gone almost before it reaches the open market.”

Even though there has been an increase in stock in Kent over the past couple of years, that new industrial and

distribution space is going to pre-lets and there is a squeeze on supply. Strong demand has helped to maintain rental growth.

Recent additions to the county and its economy include Amazon’s Distribution Centre, which began operating in the summer at Bericote’s The Powerhouse near Dartford – previously the Littlebrook Power Station - and at 215,000m2, it is their biggest centre in Europe.

On the same site and with practical completion in October, Ikea has pre-let 41,821m2.

M2 City Link, Medway City Estate and Trilogy in Sittingbourne were also beneficiaries of high demand and experienced major lettings on all three sites.

There have been a number of corporate manufacturer lettings too, most notably at the Arc, Snodland and Orbital Park, Ashford.

With new space pre-let, this leaves little choice for others locating in Kent. However, there is new speculative development due, with a 22,184 m2 site at Crossways in Dartford and others in Snodland, Gravesend, at the Medway City Estate and in Wrotham.

Developer Panattoni has been granted permission for 176.580 m2 of quality warehousing and distribution space on the old Aylesford Newsprint site alongside the M20. It is expected to complete and be occupied by 2024.

The Kingsnorth Power Station site at Hoo Peninsular is subject of a planning application – MedwayOne - submitted in March, for a mix of industrial and distribution floorspace, data centres and energy uses.

So, interest in speculative development abounds, with current activity in Kent providing exciting prospects and the promise of more to come.

With a view to sales, even though there are some strong contenders on the market relatively few established sites

have sold. However, there have been a number of portfolio sales during the past 12 months.

Lack of activity cannot be blamed on investors whose appetite remains strong – but they are looking for the right prospect.

The multi-let investment sales market has seen activity with an example of this in Sittingbourne where the 38,217 m2 Trinity Trading Estate was sold by Orchard Street to Arax Properties for £55m. The competition for this and similar prospects has resulted in driving yields inwards, as illustrated by the 10,219m2 Aylesford Commercial Park, which sold at a sub 2.85%.

When compared with the rest of the south east and wider M25 market, Kent is still benefitting from its relative ‘affordability’ but the gap is narrowing.

For more detailed information click here for a link to the Industrial and Distribution sector data and narrative.

To view the full report visit Caxtons 2021 Kent Market Property Report or download a pdf version here.

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Mark Coxon, Head of Commercial

Welcoming an audience of 300+ property professionals, investors and sector specialists to the virtual launch of the 30th Kent Property Market Report, Ron Roser, Chairman of Caxtons, authors and headline sponsors of the Report said: “This year’s Report has revealed some surprising and welcome winners for Kent’s property market.

KPMR 2021

“Science and Business Parks rents have risen and expansion’s afoot; the office sector mirrors the UK and has seen uncertainty. However, new ways of working bring new opportunities.

“The real stars of the show are the industrial and distribution sector, which has been frantic with supply outstripping demand and driving rents to an all-time high equalling a 9% increase in average annualised prime industrial rent over the past three years.

“And Kent’s residential property prices have outperformed the rest of the UK. Working from home (WFH) has played a big part and is now evolving into flexi-working with time in the office and time WFH. Buyers moved to Kent searching for more space and gardens. This high demand has driven prices up.”

Over the past year, Kent’s property market has tracked national patterns. Good infrastructure, large and small towns, villages, coast, and countryside have all been a magnet for businesses, families and individuals migrating from larger urban areas.

KPMR is produced in partnership with Kent County Council and Locate in Kent.

The Report in brief:
Science and Business Parks
Over the past three years, Kent has seen an average annual increase in prime business park rent of 2% reaching a new high of £250 per m2 .

Since January ’21, Discovery Park in Sandwich welcomed 36 new tenants and more are due before the year-end. Kent Science Park near Sittingbourne maintained high occupancy through 2021, with consent granted for additional buildings and further applications in the pipeline. Maidstone’s Innovation Centre is nearing completion and the 30-acre Kent Medical Campus in Maidstone is under way, ultimately providing 98,000 m2 for SMEs in life science, healthcare and medtech sectors.

Kings Hill, Maidstone has agreed new transactions with more space under offer since Covid restrictions eased. There are limited voids/floor space at both Crossways in Dartford and Gillingham Business Park. BizSpace moved in to the newly completed Cobalt Building at Eureka Park in Ashford where consent has been granted for additional Grade A office space for pre-letting or plot sales.

Offices
12 months office sector uncertainty across the UK has been mirrored in Kent. Main demand has been for less than 279 m2, though a shortage of quality office space means it is still at a premium, keeping rental values steady. The result is a five-year annualised average growth rate of more than 3% across the county. Sevenoaks, Tunbridge Wells, Dartford and Maidstone are driving rental growth.

There is UK wide inertia across the office sector. If appropriate, and a mix of homeworking / office commute becomes the norm, the focus may be quality rather than size, in order to aid collaboration, creativity, training and underpin the culture of organisations. BizSpace’s mix of co-working includes hot desking and private offices, and is a welcome addition in both Maidstone and Ashford.

Office space in the pipeline and under construction includes a film studio complex and business space by Ashford International Station - given a £14.7m boost in

the Autumn budget - and Tunbridge Wells BC has granted outline planning consent to U+I to provide 74,000 m2 of warehouse and offices at Kingstanding Way, on the edge of the town.

While there is uncertainty, investment sales proceed with substantial deals in Dover and Tonbridge completing. The office sector is identified as a high growth area over the next decade where quality of stock will be paramount.

Industrial and distribution
2020 saw record highs for the industrial and logistics sectors, and 2021 is repeating the pattern, with much of the growth outside the M25, deeper into the county. Kent has enjoyed a 9% increase in average annualised prime industrial rent over the past three years with a total increase of 48% over the past five-years, due primarily to demand from retailers, parcel delivery operators and third party logistics businesses for Grade A floorspace. Kent has experienced stock shortages, resulting in new space going to pre-lets. A squeeze on supply and strong demand has maintained rental growth.

Well known additions to the county include Amazon’s Distribution Centre, which began operations in the summer at Bericote’s The Powerhouse near Dartford and at 215,000 m2, it is their biggest centre in Europe. Ikea has pre-let 41,821 m2 on the same site, with completion due in October.

With new space pre-let, this leaves little choice for others locating in Kent. However, speculative development continues apace, with a 24,185 m2 site at Crossways in Dartford underway and others in Snodland, Gravesend, at the Medway City Estate and in Wrotham. Developer Panattoni has been granted permission for 176.580 m2 of quality warehousing and distribution space on the old Aylesford Newsprint site alongside the M20. It is expected to complete and be occupied by 2024.

Relatively few established sites have sold, although there are some on the market. Lack of activity cannot be blamed on investors, whose appetite remains strong. In Sittingbourne the 38,217 m2 Trinity Trading Estate was sold by Orchard Street to Arax Properties for £55m.

Trilogy

Trilogy, Sittingbourne

Retail
UK wide, the retail and leisure and hospitality sectors have been badly affected by the pandemic. Analysis from BRC-LDV Vacancy Monitor (April 2021) reported an overall retail vacancy rate across the UK increase to 14.1% in Q1 of 2021, which was 1.9% ahead of the same point last year.

Major brands disappeared from high streets increasing the number of vacancies. A pre-pandemic shift to online shopping, accelerated. Albeit there has been a small come back of physical retail in statistical terms, all main towns in the county experienced increased vacancy rates, resulting in lower rents and greater lease flexibility.

Tunbridge Wells prime Zone A retail rents are the highest in the county at £1,200 m2, still reflecting a sharp fall of 30% over the past 12 months. In some towns, gyms and leisure outlets now occupy retail space with traditional restaurants adapting to multi-level hospitality venues or ‘experiences’.

Supermarkets survived relatively unscathed with more developments planned in Maidstone, Ashford and Kings Hill, as well as a new Sainsbury’s that opened in Staplehurst in March.

The out of town market is difficult, though there have been some lettings with Sofology, Decathlon (a first for

Kent) and Hobbycraft all opening new stores. Ashford Designer Outlet has seen a strong return to their outdoor environment and has almost fully let its new extension. Bluewater has been hit with many occupiers retaining a presence, but downsizing units. However, there have been some significant lettings too including Zara Concept Store; ProCook, Sleep8, Moyenne and Amazon who recently opened a 3,500 sq ft unit.

Investment has remained active across the Kent retail market with the largest by Realty Income Corporation who paid £44.95m for the Gillingham Asda superstore at Pier Approach. Although the past year has been challenging for the retail sector, continued investment reflects the long view. High streets of the future may look and feel different, but there remains a belief that it’s still worth investing in.

Residential
This year has seen an insatiable demand for residential property across the county with frenetic activity during the first six months, aided by the 0% Stamp Duty Land Tax (SDLT) holiday for residential property up to £500k fuelling transactions and a lack of supply creating a surge in prices.

Chilmington Green Exterior credit BDW

Chilmington Green Exterior (photo provided by: BDW)

Bespoke research for the Report conducted by Zoopla revealed that all districts across Kent outperformed both the south east and UK average house price increase over the 12-months, with Dover and Canterbury both achieving a 6.7% increase over that period

With pre-loved homes in short supply, construction of new build has been active and residential schemes have been brought forward. In and around the county residential property has been built, planned or is coming on-stream in Ebbsfleet Garden City, Medway, Gravesend, Swale, Thanet, Folkestone, Canterbury, Ashford, Kings Hill, Sittingbourne and Faversham.

The pandemic has reshaped priorities and homeworking has facilitated what many hope will be a better work/life balance. London is an easy and fast commute away, which makes Kent a desirable destination, so the county has seen an influx of families and individuals seeking more space and quality of life. This will no doubt strengthen local communities and local economies, is vital for Kent’s economic development, and a silver lining if ever one was needed.

View this year's report here: Caxtons 2021 Kent Market Property Report or download a pdf version here.

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Ron Roser, Chairman of Caxtons