Now that working from home (WFH) is no longer recommended by the government, sole traders to large companies may be wondering what their next steps should be with regard to office accommodation. How to keep themselves and their employees happy whilst doing the best for their business.
We consider the options.
Sole traders whilst used to working from home, may want to alleviate day-to day loneliness that can result, and be looking for a cost-effective office base. Somewhere they can interact with others but not be tied into costly long term contracts. Or they may be thinking of taking on staff for the first time. If this is you, consider using a co-working space or a serviced office which offers ‘easy-in easy-out’ options where rent is inclusive and paid for on a rolling month basis. These types of premises are often more friendly, supportive and collaborative than other arrangements too. A recent survey revealed 50 co-working facilities currently operating across the county, boasting more than 60% occupancy for hot desking and 80% for private offices. In 2021 alone new spaces were opened in Maidstone, Dartford, Gravesend (with Thames-side views) and Ashford among others.
In contrast your company may have an established office and now need less space due to continuing WFH. In this
Maidstone Innovation Centre
If your company is expanding and you need more space, the only option may be to move unless your landlord can
offer you more space or you own the building or space and can extend, perhaps by adding a mezzanine.
However it is worth considering, with hybrid working, whether you actually need more space? An office fit-out company will be able to help you re-plan your layout to suit modern ways of working and is nearly always more cost-effective than moving.
Recent evidence shows that employees who have to be office based, even if only for part of the week, or need persuading to return to the office, or are seeking a new role with a new company, are looking, as well as for flexibility, for a wider range of staff facilities. Whether that just be better kitchens/staff rooms, more relaxed spaces for working collaboratively or even gyms and exercise equipment. Better facilities, are becoming essential for companies who want to recruit and retain good staff which is fundamental to running a successful business.
In most cases, if you decide on serviced offices, professional advice is probably not needed other than to get a solicitor to look over the lease/contract. In every other case getting the appropriate advice is essential to ensure you are making the best choice and have all legal points covered.
As news of another strain of Covid heralds the start of December, businesses will be capitalising on their experience and knowledge of best working practice, gained over the past 20 months.
While striking a balance of working from home (WFH) and office commuting are for companies and employees to agree, survey evidence increasingly points to the need for some form of communal work, to aid collaboration, creativity, training and to underpin the culture of organisations.
Across Kent this hybrid pattern appears to follow national trends, consequently – and following a chaotic 2020 – letting activity has returned leaving little or no vacancies on established business and science parks in the county.
The result of this return in demand is that rents remain relatively stable, and Kent has recorded an average annual increase in prime business park rent of 2% reaching a new high of £23.23 per sq ft (£250 per m2) over the past three years.
Given developments in scientific discoveries during 2020/21, science parks in particular have led the way.
Where other businesses have rationalised on the space they use or are likely to require in the future, the specialist nature of lab and high tech operations sustained park occupation levels throughout the lockdowns.
In addition, it’s hoped that the Government’s new Innovation Strategy, which will increase public investment in R&D to £22 billion a year, will benefit the science and technology sectors. Add to that growing investment funds available for science start-ups and grow-on companies and the result has been a rapid expansion of the sector.
At the forefront of science and innovation.
Mark Coxon, Director and Head of Commercial Agency at Caxtons said: ‘While business parks have experienced few voids and little vacancy or activity over the last year,science parks have certainly taken off in a much bigger way.
”We are seeing new demand from specialists in the scientific world that we’ve rarely noticed before in Kent. It seems that there has been a mix of tragedy – in the pandemic, meeting opportunity – Kent’s workforce and
Day One - Sandwich Discovery Park
facilities - resulting in a strengthening of the sector. Long may it continue so that Kent is at the forefront of science and innovation”
Since January ’21, Discovery Park (once entirely Pfizer occupied) in Sandwich welcomed 36 new tenants – including 14 start-ups - and more are due before the year-end, with strong demand for wet lab space from London based science companies. Construction supported by the Government’s Getting Building Fund for an incubator facility with laboratory, write up and office space for 20-25 businesses will be delivered in 2022.
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 having the potential for 1,000,000 sq ft (98,000 m2) for SMEs in life science, healthcare and medtech sectors.
Business Parks are flourishing too.
Kings Hill, Maidstone has agreed new transactions with more space under offer since Covid restrictions eased.
Due to limited voids/floor space at both Crossways in Dartford and Gillingham Business Park there has been little change or activity.
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.
In Faversham, at Eurocentre Business Park, Saphir House was taken back and modified by the owner/developer George Wilson Developments, creating two floors of office space above and ground floor retail. The building is now fully let with Screwfix taking 5,000 sq ft (464 m2).
Investment volumes have slowed and there have been no major science or business park transactions during the past 12 months.
Looking to the future, science and technology activity will, most likely, drive the increasing demand for floorspace in the parks and that will have a knock-on effect to related development (speculative or otherwise) and investment.
Kent’s relative affordability is a bonus and a pull factor, and its ability to retain a highly skilled workforce in the Garden of England will be more important than ever. In order to attract the right demographic, the overall package on offer must deliver good and affordable housing, varied lifestyle options and quality working space that Kent’s science and business parks are perfectly placed to provide.
The Hub at Kent Science Park Sittingbourne
For more detailed information follow this link to the Science and Business Parks sector data extract.
Caxtons recently won the EGi Most Active Agent in Kent award for commercial property transactions.
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.
“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.
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
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.
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
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.
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 (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.
Ron Roser, Chairman of Caxtons
There are many questions arising out of Covid-19, and the state of the commercial property market is one that has rumbled throughout the sector.
As with most disasters, there are silver linings to be found amongst the chaos.
Surprisingly to some, people have been working effectively from home during lockdown and office blocks across the country have stood relatively empty, causing many company bosses to scratch their heads and wonder whether to abandon floor space and save on overheads. Behind the scenes discussions are taking place on how any resulting voids might be rescued and/or repurposed, possibly with thoughts of improving services, more accommodating leases or Permitted Development Rights (PDR) high on many landlords’ lists.
‘Rent arrears’ is an ever present danger for commercial landlords and their managing agents, and is more prevalent now.
Numerous SMEs and larger corporations closed during the lockdown, some for good – and of those who survive, some are struggling to maintain income to cover overheads, let alone make profit.
High street names are falling, with the likes of Debenhams and John Lewis announcing store closures across the country.
Research by Santander reports up to one fifth of SMEs are seeking smaller premises. The surprise for many landlords is that their tenants are doing their best to pay or at least pay as much as they can, and where they cannot pay, to come to amicable arrangements.*
Conversely, and in a bid to service customers across the country, large online distribution organisations are snapping up sizeable re-sale industrial, warehouse and logistic units as soon as they come to market. New development sites for units are also in high demand, although there are far fewer available, especially across the south east where they are, arguably, needed most.
According to Savills, commercial property sales increased month on month in June ‘20, although they are still considerably down year on year (by -54% on June 2019) and hopes that the coronavirus impact may have flattened. But ever ready to provide balance, the Office for Budget Responsibility forecasts a fall in the value of commercial property during 2020/21 with a small rise in 2021/22, resulting in a slow but steady upwards trajectory to 2024/25.
Overseas investors are still interested in prime commercial property with proof, if needed, in the recent
As with most things these days, the commercial property picture changes from minute to minute. However, property has never been a short term investment, and for those who are prepared to sit-tight it may be a better option than the FTSI 100!
* Click here for article: Commercial property management in a time of Covid-19.
On Thursday 9 July, Caxtons' head of Commercial Management and Investment, Charlotte Laherty, and Brachers’ Partner and property litigation expert James Millis hosted a webinar to explore commercial property issues arising due to the Covid-19 pandemic and its resulting lockdown.
They discussed many of the problems that commercial landlords and tenants have faced and still face as a result
They include guidance in the government’s recently updated Commercial Property Code of Practice.
To view the webinar click here.
Caxtons’ commercial property management team has reviewed the updated government Code of Practice to help landlords and tenants pre-empt problems and prepare strategies to overcome disruption that businesses may face due to Covid-19. A précis is provided below.
The government has consulted commercial sector leaders and experts in order to develop and expand the Code, which provides guidelines to businesses who need to negotiate rental payments.
While many businesses are experiencing financial hardship due to the pandemic and lockdown, their landlords have similar issues meeting their obligations, which are often funded by quarterly rental income.
In brief, the Code is designed to support all parts of the sector and provide a best practice template, seeking consensus rather than crisis.
Where business tenants have been impacted by Covid-19 the Code is designed to bring them together with their landlords to agree affordable rents and reach mutually acceptable and constructive arrangements wherever possible.
The updated Code cites a number of issues already introduced to prevent tenant businesses folding due to the pandemic lockdown, and to buy time to plan for the future. These include:
The aim of this voluntary Code of Practice revision, which applies to the entire UK, is to smooth the route back to economic recovery. Any agreement to terms differing from an original lease should be a temporary measure until such time as tenants are able to meet their contractual obligations in full.
Businesses across the hospitality, leisure and retail sectors are recognised as being at particular risk due to loss of income during lockdown. Particular mention is made of the protracted effects that these businesses may
Commercial leases are rigid in their construct and tenants are legally liable for payments under the terms, unless and until they are able to renegotiate their position.
The Code urges tenants to pay in full if they can or negotiate with their landlord and agree to pay as much as they can. Landlords can then plan their own strategy and provide as much help as they are able to those whose needs are greatest. If they are able to reach agreement it is seen as helping with the overall economic recovery across the UK. The Code implies that in supporting good tenants, landlords secure their own futures going forward.
In addition, parties are encouraged to speak to their lenders and review all options, such as guaranteed loans and grants, business rate relief and other support for businesses, in order to ease problems before they reach crisis point.
The new arrangements encourage everyone to act in good faith; for tenants to be clear about their position and provide evidence where necessary, for landlords to explain where and how they are able to help and why they may be constrained in their assistance, and for all to act responsibly, reasonably, and to be flexible.
The Code illustrates some of the problems that might impact the tenant’s inability to meet their rent in full including lack of income during lockdown (due to the nature of their business); additional expense to comply with social distancing; reduced trade due to social distancing; obligations to existing staff and suppliers etc. The list could be huge.
The updated Code provides options to consider when setting up an agreement including: full or partial rent-free agreement for a given period; deferral of the whole or part of the rent for an agreed term; reviewing payment periods – from quarterly to monthly; landlords drawing down from rent deposits where tenants agree to ‘top-up’ any shortfall when they are able and rent reductions are amongst a variety of other possibilities.
Insurance and service charges are not profit-making, so should be paid wherever possible and unless otherwise agreed. However, the Code suggests that there may be instances where charges could be reduced when there is less use of space. Conversely, in some instances where the landlord has to introduce additional health and safety measures because of coronavirus, service charges may have to increase. Any changes to Service Charges must comply with relevant RICS regulations.
Having establishing a steering group in response to the pandemic, the government hopes that the Code offers a best practice template for commercial property landlords and tenants to achieve amicable agreement and a return to economic recovery. The Code is endorsed by sector leaders and representative bodies.
Click on the link for full details of the Government's updated Code of Practice, phone 01474 537733 to speak to an expert from our commercial property department, or visit our Commercial Management webpage for further links and information.
With a quarter of the world in lockdown due to coronavirus Covid-19, UK commercial (and residential) landlords and tenants continue to face the day-to-day issues associated with owning or renting property.
On 23rd April, a new survey conducted by Re-Leased of 10,000 retail, industrial and office properties revealed almost half of the quarterly commercial rents due in March remained unpaid. Usually ‘paid’ rate at this point is closer to 79%, showing a massive increase on the norm.
Immediately thereafter, the government banned commercial property landlords from pursuing legal action to ‘aggressively’ recover rent arrears during the current emergency. They have been prohibited from sending tenants statutory demands, formal requests for payment or winding-up orders until 30th June. So, unless commercial landlords are owed 90 days of unpaid rent they will be unable to use rent arrears recovery or send in the bailiffs, and all other methods of enforcement are effectively blocked.
Neil Chatterton, Managing Director of Caxtons, a multi-discipline firm of chartered surveyors based in Kent said, “Many of the larger multiples in particular have not paid any of the quarters’ rent which was due on the 25th March – we might conclude in the knowledge that landlords are powerless to enforce payments. However, with these measures in place, all tenants still remain liable for the rent during the period to 30th June.
“We are finding that many smaller tenants have made more effort to pay something, possibly monthly or part of the rent.”
Caxtons is encouraging its commercial landlords and tenants to be flexible at this time of crisis and to reach agreement on how and when outstanding rent should be paid. In response, some landlords are granting a rent free period to vulnerable tenants.
Neil continued, “Generally our approach has been to point tenants in the direction of government help that has been made available, in particular, grants of £10,000 or £25,000, a year’s business rates free, deferred VAT and tax payments and the government backed coronavirus loans.
“We are looking, on a case-by-case basis, to agree deferred payments of the quarters’ rents. Some tenants are pro-actively putting forward proposals, both realistic and unrealistic. Many landlords are accommodating tenants - for example by allowing them to repay monthly between June and December.
“ We are also finding that tenants are keener to agree repayment arrangements, as they know that if they don’t they will be open to forfeiture and other enforcement action post lockdown and when other restrictions are lifted.”
An issue that may be preventing both tenants and landlords from committing to a strategy is uncertainty, not knowing when lockdown will be lifted and ‘normality’ will return or when their income will resume.
Looking forward, tenants who paid March quarters’ demand may find that June is an even greater problem, having had little or no income in the interim period. Neil says “We would advise tenants to look at whether their landlords might agree to monthly payments over the next quarter.”
One other angle that, if suitable, both landlords and tenants can explore is re-gearing their lease in return for a rent concession. This may include tenants agreeing to remove break clauses, or extending the length of the term in return for a rent free period. If tenants have no intention to operate a break clause in the foreseeable future they will lose nothing but gain a rent free period when they most need it. This can work favourably for both parties especially as landlords will be assured of a guaranteed longer term let, which is also likely to increase the value of their investment.
Neil concluded “Caxtons’ efforts are largely to ensure that as much rent as possible is paid by tenants whilst trying to balance this with assisting those who are most in need and to avoid their business failing, which in turn will be to the detriment of the landlord with void property and re-letting costs.
“Most government assistance is aimed at tenants, but many landlords are dependent on rents for their income or have substantial loans to service, although in most cases the banks are offering interest or interest and capital repayment holidays.
“We will do everything we can to assist our landlord and tenant clients and our message is to talk to us and plan now, rather than leaving it until problems arise or become unmanageable.”
Caxtons’ property management departments work with multiple clients across both the commercial and residential property sector, from businesses and private tenants to industrial, corporate, student and private landlords. For more information contact Caxtons via their website at www.caxtons.com or call head office on 01474 537733.
Way back in May 2018 RICS published a report, the result of research they'd commissioned University College London (UCL) Bartlett School of Planning to undertake, that examined five local authorities who had experienced high levels of permitted development (PD) rights being exercised.
At that time the benefits and detriment to residential housing under PD – which allows building to be converted without full formal planning permission - were examined.
Some of the main findings included the quality of conversion, which was inconsistent; only 30% of the units created met national space standards; there were examples of developments with no common areas; and low quality design and poor locations were all mentioned.
Whilst office to residential conversions under PD rights had increased the number of residential property available to the market, many more of the newly available homes were of lower quality than those regulated under full planning permission.
In parallel, the University of Sheffield researched how PD had grown across England since 2000. The criteria included the number of units, financial outcomes and emerging patters, with the result that developers and agents engaged reported increased numbers of units, regeneration of the area and speed of implementation (of change).
In themselves, these outcomes were persuasive arguments to continue the policy. But when taken in tandem with the UCL findings it was a pretty mixed picture.
One of the consequences has been a reduction of office space in towns and city centres.
Many Local Authorities welcomed PD rights, some seeing it as an answer to satisfy their housing provision.
However, recently, Maidstone borough council has been reconsidering its position.
Whilst the conversion train started slowly – in 2013/4 there were seven new homes converted from office space - it has grown exponentially, with the latest 2018/9 figures standing at 297 homes converted from office space using PD rights.
This has resulted in the loss of 60,000 sq m or 30% of the total office space lost in Maidstone since 2014. Although the current loss is primarily 'low quality' office space, if the trend with PD rights continues high quality space will be next in line.
So, a recent move to reverse the trend is seeing office space being protected under Article 4 - a planning regulation that removes permitted development rights from anything specified in the Article 4 direction.
Back in the summer BizSpace announced their acquisition of two Maidstone town centre landmark office blocks, both ideally positioned close to Maidstone West railway station. Kestrel House and Knightrider House will provide 21,500 sq ft of flexible office space.
BizSpace is an important part of a community of business centres, providing flexible office space to entrepreneurs, freelancers and SMEs not yet ready to commit to buy or lease long-term premises.
Meanwhile, near neighbour Ashford is experiencing recovery in their prime office rents, which are 25% above their pre-financial crisis peak and display much higher growth than the rest of the county.
Their prime industrial rental growth has risen 38% since 2013 (14% over and above Kent in general) and there is speculative construction off the back of these attractive figures.
Finally, prime retail rents have risen 11% in just 12
months and it has attracted a rise in residential values of 26% in the past five years. This bucks the trend not only across the county, but the whole of the UK.
Could the example of Ashford prove that creating residential from office is not the answer to thriving communities? Is it better to approach towns and cities holistically, recognising that offices provide a vital community of daytime shoppers for retail and restaurants alike. While they do need good quality residential accommodation we may be throwing the baby out with the bath water by allowing too much through PD rights.
Perhaps the primary questions to be answered are:
Going forward it may be that more local authorities seek exemption, in the same way that The City of London and 16 other local authorities, have been granted exemptions from the government's controversial relaxation of office-to-residential conversions.
by Mark Coxon, Director & Head of Commercial Agency
According to CoStar, who for more than 20-years has researched and recorded the UK's commercial property market, in the 12-months to June 2019 office rents in Kent grew at a faster rate than the UK as a whole.
A combination of affordability and easy access to towns such as Sevenoaks, Sittingbourne and Ashford, has underpinned demand.
Over the past two years, Kent has come to the attention of institutional investors attracted by relatively affordable business space rents with growth potential. This combined with highly accessible markets has changed perceptions and driven activity.
In the office market there is burgeoning demand for space from larger companies, particularly across the knowledge intensive business sectors. Such activity has been limited by a shortage of prime town centre space favoured by some sectors of the knowledge industry. This is demonstrated by Covéa Insurance who employ 400 staff at their 52,000 sq ft King's Hill offices. They have recently renewed their lease, thereby securing a long-term future in the region.
While Kent's town centre office market has seen a number of key lettings over the last year it continues to struggle with a shortage of quality new space. This lack of supply has contained rental growth in some locations.
The county's business and science parks have witnessed a similar growth in knowledge intensive buisnesses ranging from computing, engineering and the life sciences. With the addition of incubation space such as that opened at Kent Science Park and Discovery Park, Kent will be better placed to develop its own knowledge-based ecosystem.
This pattern is replicated in the industrial sector. Both the industrial market and big box logistics (aka custom warehouse solutions) have seen pressure on available space. The Caxtons' average Kent industrial rent rose to £92 per sq ft, with growth of almost 11% over year to June '19. When compared across the same period, this pace of increase is ahead of the other property sectors in the county. And CoStar analysis finds the county has outperformed nationally since 2014.
Stock shortages and the growth in knowledge intensive businesses represented in the industrial market have helped underpin this performance.
Caxtons' director and head of Commercial Agency, Mark Coxon says "Ashford's approach to the recession, austerity, Brexit and general doom and gloom seems to have been positivity and pro-activity. It's Boris on steroids. And as far as we can tell, this is working to the benefit of the town and surrounding area, which is becoming a hive of business, industrial and retail activity.
"Earlier this year we, in conjunction with Ashford Borough Council, were the authors of the first ever Ashford Property Market Report (2018/19), which highlights the developments that are attracting both investors and businesses to the area."
Ideally positioned just 38 minutes by train into London St Pancras, Ashford is the place to be.
Ashford 'Commercial Quarter' is attracting many new and established businesses to the town.
In 2018, Quinn Estates, partnered with George Wilson Developments, completed the build on Connect 38, a town centre office and retail development adjacent to Ashford International Station. This is the largest office
In May 2019 The Curious Brewery opened state of the art premises in order to produce its premium and craft beers for an ever-growing market. Set in a 1.6 acre site, in addition to the brewery there is an on-site bar, restaurant and gardens in which to enjoy the fine beers they produce.
Another new recruit to the area is Faversham-based Macknade, who is opening an all-day dining experience in Elwick Place. Other new occupants will include a six-screen Picturehouse boutique cinema and a 58-bedroom Travelodge hotel. A £90m extension of the McArthur Glen Outlet, designed by the Richard Rogers Partnership began in 2018. It will provide an additional 100,000 sq ft of space comprising 50 new units and fine dining facilities and is due for completion late in 2019.
These are part of an exciting plan for Ashford, maximising the benefits that HS1, Ashford International station, its close proximity to the Channel ports and main arterial routes have all brought to the area.
Ashford Fast Facts:
BizSpace recently announced their acquisition of two Maidstone town centre landmarks - Kestrel House and Knightrider House – which will provide 21,500 sq ft of flexible office space ideally positioned close to Maidstone West railway station.
Founded in the dying days of 2006, BizSpace now has an annual turnover around £6.5m. It joined a community of business centres, providing flexible office space to entrepreneurs, freelancers and SMEs not yet ready to commit to buy or lease long-term premises.
Now the revolution has arrived and, no longer the new kid on the block, BizSpace's premises and provision stretch like a well-organised web across the country. They boast 105 locations stretching from Coatbridge to Poole and every stop in between.
This seems to be a good time to be in 'workspace' provision.
The Office of National Statistics reports: "The rapid growth of self-employment has been a pronounced feature of the UK labour market in recent years. The number of self-employed increased from 3.3 million people (12.0% of the labour force) in 2001 to 4.8 million (15.1% of the labour force) in 2017."
It would seem that BizSpace were timely in their move into the sector.
In addition Labour recently announced that, if elected, they will ditch Permitted Development Rights (PD) – the route by which freeholders are able to convert office space to residential without requiring prior planning permission. And they have – in droves.
Mark Coxon, Director and Head of Commercial at Caxtons said: "With the lack of demand for larger units it leaves a vacuum for some of the remaining, better quality offices, to be skilfully converted to adaptable co-working space with communal areas and bookable meeting rooms.
"Obviously, we welcome BizSpace's move to Maidstone and look forward to both these buildings becoming a hive of new and invigorated activity in the near future. Their investment of £1.1m to refurbish Kestrel House and Knightrider House over the coming four months is another positive milestone for the property sector and business in Kent."
The 2018 Kent Property Market Report revealed many positive aspects about the property sector in Kent, but echoed national fragilities. Six months on, the picture is still positive with better than average reasons to invest in the county.
Industrial: The industrial sector across the south east has undergone a revival. Following years of comparatively inexpensive commercial rents and land values in Kent, the county's rental uplift has outstripped the rest of the UK year-on-year since 2014, but it is still seen as good value and industrial rents have grown in most Kent markets over the past 12-months.
The jewel in the crown for land values is Orpington at £3m/acre, followed closely by Dartford where they reached £2m/acre, with Sevenoaks at £1.5m/acre and Gravesend £1.2 m/acre. Currently the county has 580,000 sq ft under commercial construction, with the added bonus of increased rental prices on new build.
Office: The Office market mirrors the industrial sector success and is seen as affordable when compared with London and prime south east property. Kent has reported the highest rental growth in the UK during the past 12-months. Overall, in both town centre and business park locations, the county has had a 9.2% rental increase, which is led by Dover with an enviable 12% uplift. Sevenoaks and Bromley lead the way with rental levels at £30/sq ft.
Smaller office units are quickest to let with activity below 5,000 sq ft high. Up to 10,000 sq ft there is reasonable activity reported, while larger sized property is slower to move. Lack of stock is a problem, which has resulted in flat investment levels.
Retail: Retail findings at the end of 2018 revealed regeneration and strategic management had compensated for a seismic shift in retail habits, and had added buoyancy in some towns across the county where they had implemented such plans. 6-months on this has not changed. The effects of changing retail habits has taken, and is still taking its toll with 25% of all sales now
Although out-of-town retail investment has dropped 80% year-on-year since 2012, investors are still drawn to redundant shopping centres, where re-purposing is an option. In order to find a way out of low rents and low capital values the market needs to accept this and fundamentally change.
Residential: Residential land values have continued to increase across Kent, although this is not reflected in sale prices. Local Authorities are under pressure to increase allocation of land for residential development and the greenbelt is, as ever, high on their agendas, protecting it wherever they can. Investors can still be found in the development and private rented sectors, where there is still traction.
Ashford: The exemplar in the county is Ashford, where prime office rents are 25% above their pre-financial crisis peak and display much higher growth than for the rest of Kent.
Ashford prime industrial rental growth has risen 38% since 2013 (14% over and above Kent in general) and there is speculative construction off the back of these attractive figures.
Bucking the trend both across the country and county, Ashford's retail growth has risen 11% in just 12-months and it has attracted a rise in residential values of 26% in the past five years.
In Summary: Overall, the property sector in Kent is standing up well to current political uncertainties.
Mark Coxon, Director and Head of Commercial at Caxtons said "We are delighted at the half-year property market research results and look forward to a busy run-up to the full report launch in November.
"We are still dogged by uncertainty and delayed investment decisions relating to Brexit but live in hope that these will soon resolve and that we will all be able to move forward positively."
In May the Labour Party announced that if it wins the next election it will ditch Permitted Development (PD) rights, where owners and developers can, within certain parameters, convert commercial property into residential accommodation without applying for full planning permission.
Labour says the policy has resulted in slum housing and many homes built using permitted development disregarding national space standards.
Permitted Development rights
Introduced in 2013 by the previous Conservative and Coalition Governments, PD rights was an attempt to free up inertia in a planning system that had been exacerbated by a dearth of local authority planning officers, which in turn had caused unacceptable delays on planning decisions.
From the outset 17 local authorities (including 11 London Boroughs) were granted an exemption to prevent office to residential conversion using PD rights1.
Listed building and various other properties are exempt under the rules of permitted development.
Experts at Caxtons Chartered Surveyors, one of the largest independent multi-disciplinary property firms in the South East, consider the potential impact that such a move might have on the market. It's a mixed bag.
Without dismissing the announcement as a politically motivated statement or just to gain a headline, it is an indication of ignorance about how the property market works.
The two main political parties have pledged to encourage building more residential properties to try and resolve the shortage of housing and the PD rights (which was originally a short term measure and subsequently extended) was designed to help by - at least partially - by-passing the long time delays and costs caused by the planning system. It is reported that PD rights has resulted in the creation of around 42,000 new homes, which would not otherwise have been created.
Whilst there is an argument that a minority of units created have been substandard, in my opinion the way to tackle this would be to impose mandatory minimum standards, rather than scrapping the scheme altogether.
Although PD rights has succeeded in adding to the housing stock and has removed a number of old and redundant office buildings, in some cases it has had the effect of removing perfectly serviceable offices from the market. In turn this has led to a shortage of office accommodation in some locations and has stifled business growth.
As with any government initiative, there have been downsides, although overall, the opinion of our valuer is that the introduction and refinement of PD rights has been successful.
The Commercial Agent
In Kent, PD rights and the re-purposing into a variety of residential variations of what were considered traditional commercial buildings has soaked up much of the surplus office, retail and other vacant premises. This has created an increased demand by commercial developers to fill the consequential void. Oversupply of office development has reduced – particularly in towns such as Maidstone - which in turn has made way for potential speculative development applications.
Going forward, the announcement from Labour will have little effect because the rate of conversion of properties from office to residential has slowed considerably and the 'low hanging fruit' has already been converted.
The Commercial Management and Investment specialist
If there is an early election and Labour succeeds in its endeavour to govern the country it will, on one hand, be a shame if they withdraw PD rights.
Many of our clients have benefited from this automatic grant of planning permission, which allows for certain building works and changes of use to be carried out without having to make a planning application.
Clients who have particularly gained are those who have converted vacant office space that has fallen behind current requirements that, without expensive and unrealistic refurbishment had rendered it un-lettable. Some of those properties were in areas of over-supply, so PD rights removed them from the office market, which has had little or no detrimental effect on local businesses.
More importantly many local authorities and home owners have benefitted from the resultant increased supply of our clients' good quality and much needed housing, mainly situated in well-connected locations close to public transport links, arterial roads or in some cases, in town centres.
A good example of this is a scheme at St James House, Canterbury. As an office, the property had been vacant for years prior to its conversion into 12 residential flats.
However, PD rights could and probably has been abused by unscrupulous developers, resulting in poor quality and poorly thought-through schemes slipping through the net.
Ultimately, conversions under PD rights still have to pass Building Control and local authorities be satisfied that any change of use does not have adverse impact on highways, waste management and environmental issues, so there is a degree of control albeit perhaps these need extending to space standards and other areas of concern. Perhaps Labour should review whether they are throwing the baby out with the bath water.
Overall the scheme has been pretty successful in bringing into use out-dated office buildings, providing much needed residential accommodation and re-populating town centres.
The conversion process has encouraged investment and employment. While it is true that in some areas – though certainly not all - offices supply has reduced, if this promotes new office development of buildings meeting contemporary requirements and in suitable locations, that is surely a good thing.
Office-to-residential conversions must comply with the same building regulations as any other development and whilst some of the units may be smaller than national space standards they may well appeal to many.
It is certainly true that extremely onerous planning restrictions and hoops to jump through make many potential developments unviable and a simplified planning process and lower costs will make it more likely these will go ahead.
A lot of suitable sites have now been converted so withdrawal of the scheme may not make a huge difference, but it will be a shame to see it go when across the board, in my view, we need less regulation not more!
It seems that experts at Caxtons agree this was a poorly thought through and ill-conceived policy announcement, made for the wrong reasons and with little regard to the problem is was designed to help to solve.
1 This exemption expired on 31st May 2019. According to media coverage, 15 of the 17 local authorities are taking measures to continue to prevent office-to-residential permitted development by introducing an Article 4 direction.
In association with Caxtons, the Ashford Property Market Report is produced by Ashford Borough Council, and uses and updates Caxtons' earlier research from the Kent Property Market Report (2018) alongside newly researched data.
The report highlights that Ashford, one of the fastest growing towns in the South East, is currently enjoying a more positive property experience than other areas in the county.
With prime office rents at 25% above their pre-financial crisis peak; prime industrial rental growth of 38% since 2013; retail growth of 11% over the 12 months (to Q3 2018) and the average residential value up by 26% over the past five years Ashford is working hard and leading where others follow.
A recent Caxtons' retail update illustrates how Ashford, in particular, has seen falling town centre vacancy rates. The borough council's purchase and management of the now, near full, Park Mall shopping centre, together with activity across the wider town has seen positive and welcome results.
Caxtons is the major contributor to 'Kent Property Market Report', and seeks to provide intelligently gathered and useful information to those interested in the property market – whether local authorities, institutional or individual investors, commentators or property professionals.
Ron Roser, Caxtons' Chairman said "With our extensive knowledge of the Kent property market and history of researching and bringing to the fore vital information on the state of the sector across the county, we were delighted to collaborate on the new Ashford Property Market Report.
"By scrutinising the market annually then analysing, collating and publishing the results, we strive to deliver a barometer by which others can review and examine the property market, not only in Ashford and Kent, but also as a bellwether for the wider South East."
Recent key developments that have played in to the report's findings include the Commercial Quarter – the largest office block to be built in Kent for 20 years; the planned transformation of disused industrial buildings into The Coachworks, an inventive and inspirational mixed-use space; an expansion underway of McArthurGlen's Designer Outlet close to the Ashford International station, and at Victoria Point where a 120-bed hotel, apartments and retail units are being built all demonstrating that Ashford is a powerhouse of property investment and activity.
Furthermore Ashford is very accessible. High Speed-1 journeys to London take just 38-minutes and junction 10a of the M20 is due to open later in 2019, both of which add to the area's attractiveness for developers. This is resulting in exciting new schemes including a former railway works, due to become TV and film studios, upmarket homes and extensive green space.
To view the report visit Ashford Property Market Report 2018/19
(l to r) Ron Roser - Caxtons Chairman, Ross Murphy - Pagesuite, Tracey Kerly - CEO Ashford, Gerry Clarkson - Leader Ashford BC
The Ashford Property Market Report launch video
A short interview with Caxtons' Chairman, Ron Roser
Kent has not been immune to the downturn in the retail market. Overall, prime high street rents in the county have dipped -2.7% losing some of the gains made in 2016 and 2017. Towns at the upper end of the rental scale have struggled more as affordability dampens demand.
Kent average prime high street rent
Source: Cradick Retail
However, Kent also illustrates many success stories as town centres are reinvented in the face of this period of structural change. The first phase of Legal & General's £53m St James development in Dover, providing 14,586m2 (157,000 ft2) of new leisure and retail space opened in the spring, while the Spirit of Sittingbourne regeneration reached its first milestone this year. The impact of such schemes on rents inevitably takes time, particularly given the challenging backdrop. The potential impact is exemplified in Ashford where the vacancy rate has fallen following the borough council's purchase and management of the now near full Park Mall shopping centre, combined with activity across the wider town.
High streets are evolving their role with a greater mix of occupiers, aided by rental adjustments. In January
The latest Local Data Company research, undertaken for Property Week, shows Kent has seen a sharp improvement in occupancy levels (August 2018) when compared with the national average.
Average High Street vacancy rate
Kent 7.80% 8.90%
UK 11.30% 11.00%
Source: Local Data Company, August 2018
The county saw the two largest retail transactions in the south east in 2018- Royal Victoria Place in Tunbridge Wells sold to British Land and the Whitefriars Quarter sold to Canterbury City Council.
These deals contributed to Kent seeing 30% of all retail investment transactions in the south east in 2018 (Source: Caxtons).
Both transactions underline the potential opportunities seen in town centres where investors and local authorities work together to deliver a holistic long-term strategy for vitality underpinned by a robust and diverse economic base.
Director - Business Space, M25 East
The 2018 Kent Property Market Report launched on 1st November and reveals recent commercial activity is led by a powerhouse of small businesses and not, as in the past, by larger established companies and corporations, and discloses that that the level of businesses migrating to the county is rising.
The Report, researched in the main, by headline sponsor Caxtons Chartered Surveyors, is published in collaboration with Kent County Council and Locate in Kent.
The launch of the Report revealed many positive aspects to the property sector in Kent, but with echoes of national weaknesses caused by economic uncertainty and global trade deals being 'repositioned'.
Some of the findings in the Report reflect changing global trends:
Despite a national crisis on the high street, towns and cities across Kent have survived better than many. In the main this has been due to regeneration projects and management strategies, as well as increased town centre dwellings, which have all contributed and underpinned the life of some of Kent's conurbations.
In parallel with other counties, Kentish towns have lost major players from the roll call of well-known high street names. Conversly, this has provided opportunities allowing independents and new enterprises to enter the market and occupy prime positions that they could not have considered in the recent past. Having said that, towns with higher rental values are not faring as well and struggle to achieve financial expectations.
However, the Report highlights that the diminishing attraction of high street retail has had a knock-on for those who feed the purchasing frenzy of online shopping. The industrial sector has been the beneficiary and there distribution space is in high demand. Both Amazon's 34,000m2 last mile sorting centre in Medway, scheduled to open before the end of the year and Ocado's plans for a 1.92ha site at Littlebrook are a perfect illustration.
Good performance in the wider market has impacted rents, pushing them up by 24% in five years as well as increasing speculative development.
Some offices to residential conversion has made space more difficult to find, but in general the Report reveals that the office sector
Whilst business parks have seen a small fall in rents, this has attracted SMEs and incomers new to the country into any vacant space even though average prime rents are 5.4% ahead of the market peak in 2010.
According to the Report, high quality skilled labour has been instrumental in attracting new businesses into the county with the residential construction market playing a major role.
In 2017/18 the number of new homes completed across Kent rose by 7.3% on 2016/17 figures and there was a sharp upturn in the number of units with planning consent or in the planning pipeline.
With housing stock increasing, the supply and demand chain has been restrained with overall prices rising by 3% and more affordable areas such as Thanet (7.4%), Dover (5.2%), Canterbury (4.7%) and Swale (4.7%) seeing the highest uplifts. Only Gravesham saw a fall in prices, down by 0.4%.
Chairman of Caxtons, Ron Roser, said: "What really comes through in this year's report is just how commercial property activity is being driven by the needs of micro and small businesses rather than large corporations. It's also good to see more space being occupied by companies moving into the area.
"In many areas of the county, the increasing involvement of local authorities in both commercial and residential property development is helping to make a real difference, especially where there is less appetite from the private sector.
"With developers, planners and local authorities working together, much is being achieved. This can be seen out on the ground where infrastructure, housing, regeneration and commercial developments are all coming forward."
KCC Cabinet Member for Economic Development Mark Dance said:"Whilst the economy has been relatively resilient over the last 12 months – despite Brexit and potential trade wars – the report shows us there are wide variations in the performance of individual sectors of the economy.
"Kent remains and is increasingly, a business location of choice with strong letting figures in the town centre office market.
"I'm in no doubt that times are getting tougher, however, particularly in the retail sector, but town centres are changing and Kent has seen a fall in vacancy rates contrary to the national trend.
"I believe Kent remains resilient with a business environment seen as favourable to investment with major initiatives and projects to support growth and economic development in our county in the coming year."
Gavin Cleary, CEO Locate In Kent, said: "The 2018 Kent Property Market Report mirrors what we are seeing on the ground with businesses and people attracted to Kent because of its affordability, connectivity and quality of life.
"From the booming food and drink industry to globally focused manufacturing and a growing creative and digital sector, Kent and Medway is quickly becoming the go-to location for business success.
"With the regeneration and investment in towns and communities across the county from Ashford to Canterbury, Medway to Folkestone, we have all the ingredients in place for a future-facing and thriving, vibrant economy."
The Kent Property Market Report is supported by RICS.
For more information and to download a copy of the 2018 Kent Property Market Report, visit Kent Property Market Report 2018
Six months after the launch of the latest Kent Property Market Report, Mark Coxon, head of commercial agency and one of the authors of the 2017 report, shares an update.
The last 18 – 24 months has seen the greatest increase in both land values, industrial rents and investment yields, which are now higher or have hardened when compared with pre-recession 2008.
The amount of money being invested into the sector by UK pension funds and overseas investors is at an hiatus where yields on multi-let industrial estates are now reaching 4%, the lowest they have been. Similarly, single let sheds are seeing yields in the order of 5%, the disparity due to the risk in taking on one single asset.
What is true throughout the South East and not only in Kent, is the lack of investment stock. Primarily, investors have nowhere to put their money if they do sell. Coupled with a lack of development over the last 10 years this had led to little availability.
Industrial land values
Although there is a lack of land to actually build in Kent, land values have similarly risen to a level not seen before. In Dartford, for example, land values are now at £1.5m per acre; and moving further east Rochester is now off £650,000 per acre. Sittingbourne has lagged behind but is trading at £450,000 per acre, which is a 10% increase over the last 6-months but is seen as good value. Closer to the M25, Sevenoaks is at £1.5m per acre. East Kent has seen little increase due to relative lack of occupational demand.
The county's existing stock has eroded with the increase in pre-let activity. We have seen the London Medway Park in Rochester letting over 600,000 sq. ft. over the last two years. Speculative construction is currently evident in Belvedere with over 200,000 sq. ft. within 3 buildings having recently been built.
The self-storage and trade counter market has also come back - the former finally putting behind them their recession driven reluctance to move beyond the M25.
Where the buoyant residential sector is crossing over and affecting the industrial market is on deals from house builders acquiring sheds and land to store product for their modular home concepts. Berkeley Homes have purchased 10 acres in Northfleet to construct a modular build facility, and other similar developments are planned elsewhere in the county.
Kings Hill and Crossways Business Park are seeing some demand for the larger floor plates, but the majority of activity countywide is below 5,000 sq. ft. Gillingham Business Park has, for the first time in its history, been near to 100% let.
Sevenoaks and Bromley are leading rental levels at £30 per sq. ft. Other centres such as Chatham Maritime are yet to see any significant lettings this year. The east of the county, in particular Ashford, has had a few successes with Ashford pre-letting an entire floor of the Quinn development-Connect 38 - the first new town based office development in Kent for approximately 20 years. Discovery Park's new owners are in the process of applying for planning permission to extend the park. Some local towns are still struggling with substandard stock, although due to Permitted Development rights, much of this has been lost to residential.
There is little to report on the investment market due to lack of stock. What has been on the market has needed a robust occupational story to catch the investor's eye, but sadly Kent office investment does not always attract the major funds. The former Chambros House is under offer to the NHS with secure income off 7.5%; two offices at Eureka Business Park - 200 and 210 - are available at 8.6%; this follows the sale of Units 110 and 120 Trinity House to the London Borough of Bromley in April last year at 6.16%.
The picture wouldn't be quite complete without a brief comment on retail. The high street always loses to out of town retail centres, but actually continues steadily, though fortunes are very much town specific. The latter are all performing well with very few voids. Most noticeable lettings include the St James Retail and Leisure Development in Dover where the Food Warehouse, part of the Iceland Group, have acquired.
With a host of Company Voluntary Arrangements (CVAs)and administrations, most towns will be affected by an increase in stock, although these retailers have always picked good locations within the high street so re-letting may not be so much of a problem. There are few investment transactions, but high street retail is still reaching around 4% for good covenants and long leases.
Other sectors such as out of town retail, hotel, and the food and non-food sectors are all desperate for well-located sites. Similarly local authorities are actively looking for sites to accommodate their D1 school requirements. Sites for motor dealerships are also hard to come by, although Jardine's has just acquired 3.5 acres, which fronts the A26 at Tonbridge, for a new facility.
The funds and private equity companies continue to pile into emerging sectors including accommodation for students, where Deutsche Finance Ltd has purchased Canterbury Student Manor. The Care home sector has had similar success with Legal & General acquiring in Leeds Village at Ledham Farm.
Caxtons is hoping for another 12–18 months of a good and stable market before one or two drawbridges have to be pulled up, following the UK's exit from Europe, but who can actually predict what the Brexit effect will be?
Caxtons Chartered Surveyors is delighted to have completed the let of 4,435 sq ft of office space on a new full repairing and insuring 5-year lease at The Courtyard, Gillingham. Incoming tenant Dynasafe BACTEC Ltd, a leading Explosive Ordnance Disposal and Mine Action company, will be moving into their new offices as soon as possible.
The Courtyard is a development of individual office buildings ideally located in north Kent, adjacent to the A2 and the A278 dual carriageway with the M2 Motorway (J4) approximately 2.5 miles away, which gives direct access to the M25 or Channel Tunnel and Ports.
Each office at The Courtyard has excellent natural light, is carpeted and has suspended ceilings. There is ample parking on site.
Mark Coxon, Head of Commercial Property Services at Caxtons said " The Courtyard provides a well managed and secure business environment for a variety of occupiers. It is set in 150 acres where the office buildings surround a landscaped square in a mature woodland setting, yet with easy access of main arterial routes. We are happy to have been able to meet the new tenants exacting requirements and that they have found the right premises to suit their needs."
The Courtyard, Gillingham
Commercial Negotiator James Squire who works in Caxtons' Maidstone offices said "Commercial sector property, whether for sale or to rent, has been more buoyant in recent months than for some time. There is no particular pattern to the type, size or location of property, it seems there is just more impetus from buyers, sellers and tenants – whether starting out on the property ladder or expanding."
Two particular properties that have changed hands in the first quarter of this year demonstrate that it is not just in the big towns that things are moving.
A new 20-year full repairing and insuring lease was agreed in February on an end of terrace two-storey brick-built property in Meopham. The premises comprise a ground floor commercial unit and first floor offices with car parking at the rear of the property.
James continued: "At first glance these may not seem earth shattering deals, but it does demonstrate that there is positive activity across the entire property market in Kent."
New Meopham male grooming establishment
Mark Coxon, Head of Commercial Property Services at Caxtons, is delighted to confirm that he has completed on the let of two new distribution units at Access Park Aylesford.
Mark said "Securing these deals in this dynamic commercial area is very gratifying. Both new tenants are keen to commence their tenancies as soon as possible and we are sure that each will contribute to and bring benefit to the area."
In Kent, the number of economically active people aged 16 to 64 has grown steadily in recent years. The employment rate for males (78.2%) is above the national average of 77.0% and the employment rate for females (67.1%) is slightly above the national average of 66.4%.
Units, 2A and 2C completed within a week of one another and each is an end property in a terrace of 3. They are strategically located 1.5 miles from Junction 4 of the M20, with links to the Kent ports and national motorway network, so ideally positioned for all onward routes.
New tenant and distributor of car parts and accessories, Euro Car Parts Ltd, operates from more than 200 locations across the UK and Ireland, and has now acquired the 27,191 sq ft unit, 2A, on new full repairing and insuring lease for a period of 15 years.
The larger unit, 2C, is 34,853 sq ft, and has been let to incoming tenant Priory Business Group plc, a print management company dealing with print from initial design to production, storage, fulfilment and distribution. It has been secured on a new full repairing and insuring lease for 10 years.
All of the units have 9m ceiling height, up to 40m yard depth, fully fitted offices with comfort cooling and heating systems, raised floors, lighting, carpets and a kitchenette, secure fenced yards and car parks.
The landlord is Merseyside Pension Fund.
Caxtons Chartered Surveyors has completed on a deal to let 6 Conqueror Court, Sittingbourne – 1,692 ft2 of modern office space – on a new full repairing and insuring lease until January 2026.
6 Conqueror Court is a ground floor self-contained office with 7 parking places and is located off the busy A249, just 2 miles from the London to Dover M2 motorway and onward access to Europe via the Channel Tunnel and ferry ports.
The unit is on the ground floor of the two-storey end of terrace purpose built property. It has raised and carpeted floors fitted with cabling and floor points; comfort heating/cooling; DDA access; a mix of individual and open plan office space; cloakrooms and a well-fitted kitchen; parking for 7 cars and upkeep and maintenance of external and common areas is covered by a service charge.
After an initial 3-month rent-free period the rent annual rent is £27,072 and there is a break option and rent review in the lease for January 2021. The new tenant, Terradace Holdings Ltd, already occupy Unit 4 at Conqueror Court. They have taken unit 6 in addition to their existing property.
Mark Coxon, Director and head of Commercial Agency at Caxtons said: “Caxtons was appointed joint agent by the landlord, Conqueror Property Partners Ltd so we were doubly delighted to be able to finalise the let to Terradace Holdings on this well appointed and easily accessible office unit.”
More than 250 people from across the property and business sectors attended this year's launch of the Kent Property Market Report, which was researched and compiled by Caxtons and produced in conjunction with Kent County Council and Locate in Kent.
The breakfast event, held at the Great Danes Hotel near Maidstone on 2nd November, revealed some surprisingly upbeat statistics that bucked the trend of lacklustre results for the property and construction sector in other parts of the country.
Straddling major routes from the continent to the capital and beyond, makes Kent and Medway strategically pivotal in the south east. In addition, the cost of property and land has made Kent and Medway attractive for business and industry alike.
Growth continues in the office, business park and industrial sectors, and activity in the housing market is buoyant with developments such as the new Ebbsfleet Garden City well under way.
Increased exports have provided short-term gains in the industrial and distribution sector due, in part, to the Brexit vote and resulting fall in the pound. Also, the lack of development during the recession years has resulted in an increase in the average prime rent in Kent and Medway of 9.4% during over past twelve months.
Rents on business parks have remained largely stable and there has been expansion in the Life Sciences with the launch of the North Kent Enterprise Zone.
Average vacancy rates across the retail sector are down from 9.9% to 8.9%, which exceeds the national average and prime retail rent is increasing faster than in the previous 10 years.
House prices continued to grow and outpaced London during the year to August 2017. HS1 was providing new opportunities to live outside the capital and commute in,
Inward investment to the county continued apace and in the twelve-month period under scrutiny, Locate in Kent assisted 56 companies to find property occupying in excess of 700,000 ft2, an increase of 200,000 ft2 on the previous year.
Chairman of Caxtons, Ron Roser, said that the firm was delighted to be presenting such a strong picture of the sector in what had been a difficult year post the Brexit vote. "In our fifth year as main sponsor and contributor to the Kent Property Market Report it shows more than ever how investment in infrastructure, regeneration and business space is translating into occupier demand and improved investment prospects.
"This year's report reflects positivity across the property sector in the county and we look forward to a very busy year ahead."
Caxtons is one of the largest independent property practices in the south east. Operating from offices across Kent, Caxtons offers a range of consultancy, management and surveying services in the commercial and residential sectors, managing around 7,000 properties in the region.
For six out of the past seven years, Caxtons has been awarded the prestigious 'EGi Deals Winner Kent'. Based on commercial property lettings and sales achieved in the previous twelve-months, Caxtons has consistently performed well, with results showing year on year increases throughout the period.
Caxtons has researched and compiled information for the Kent Property Market Report, and publishes the information in tandem with Kent County Council and Locate in Kent.
Latest analysis from Caxtons Chartered Surveyors points to how business change is raising demand for office space in many of Kent's town centre office markets. This is having a knock-on impact on capital values in the county.
Caxtons reports the prime town centre office yield in Kent fell sharply during 2016 to 6% by the end of the year, the lowest level since the financial crisis. This 200 basis points decline since 2015 has bolstered capital value growth for investors in the county's town centre office markets.
Kent prime office yield
Business change is a key driver of rental growth that is underpinning much of the upward pressure on values. Quality town centres with good accessibility to London have a growing appeal to companies, including those that may have wholly or partly relocated from London. Companies remain cost conscious and are increasingly seeking to reduce overheads. For example, office rents in what was affordable Shoreditch now stand at £60 per square foot. This compares to £26 per square foot in Sevenoaks and £25 per square foot in Tunbridge Wells, both offering a short commute for meetings.
Furthermore, staff are increasingly seeking to work nearer home, for greater flexibility. This is reflected in a growth in flexible working practices as well as the number of freelancers providing high value services to companies in London or further afield. This is generating demand in Kent's town centres for both traditional office space as well as co-working space.
The upturn in demand has depleted available office space, which has fallen across quality town centre locations in the South East.
The loss of stock as a result of large scale office to residential conversion of older, more obsolete buildings
The success of Kent's town centre office market has served to bolster investor demand, also placing pressure on prices. A wide range of investor groups are seeking to increase exposure to quality locations. These include a growing number of local councils, who, with the benefit of low cost debt, are joining the bidding for assets that do come to market. This has placed further pressure on values.
During 2017 Caxtons expects to see continued strong occupier demand for quality town centre locations across Kent. This will put further upward pressure on rents in some towns. Sevenoaks for example is expected to reach close to £30 per square foot this year. However, Caxtons also anticipates yields will stabilise for office assets this year.
Charlotte Bland BSc (Hons) MSc MRICS has been appointed a full board director at Caxtons, one of the largest independent firms of general practice chartered surveyors and property consultants in the South East.
Born, raised and living in Kent, Charlotte graduated from the London South Bank University with a Distinction in MSc Real Estate Appraisal. Her first job was with a small, independent firm of surveyors in Hertfordshire, working mostly on landlord & tenant and corporate real estate matters. Charlotte joined Caxtons in 2011 and now heads up the Commercial Management and Investment department. She specialises in acquiring and disposing of property investments for a variety of clients.
Neil Chatterton, Managing Director of the award winning firm said "It has taken Charlotte less than six years to become a director of the company, which was founded in 1990 and is a busy regional practice.
"Charlotte's experience, knowledge and passion ensure that clients benefit from her advice. She is a great advocate for all who enter the sector, which is seeing more women taking on influential and powerful roles across the property and construction industry.
"We are delighted that Charlotte is taking on the role and I and my fellow directors welcome her considerable expertise to the Board."
Charlotte was pragmatic about her appointment saying that when she began her career in property she knew that it was for her: "I always needed a career that I would enjoy every day - a career for life – and I found it in property. I am serious about the sector and ensuring that it flourishes. I have learnt so much since qualifying and I endeavour to use that knowledge and expertise to my clients' advantage, whatever the project in hand."
Charlotte took up her post on 1st July 2017.
In 2012, Building Cost Information Service (BCIS) conducted research into under-insurance in commercial property. Results confirm that despite regular reminders, as many as 80% of commercial buildings are still under-insured.
Coinciding with the launch of BCIS's commercial property rebuilding calculator, this was a stark reminder that if shortfalls in reinstatement claims are to be avoided, regular reassessment of property value is vital.
Morag Keohane, Caxtons' insurance manager, says: "Unfortunately too many property owners rely on the building value to be index linked and allow the value to go unchecked year on year.
"We also see many purchasers relying on the value the vendor insured the property for without confirming if this is correct, or adopting the asset value as the reinstatement cost.
"This means that insurance companies will not have accurate details regarding the value of the building and any claims may therefore be subject to average if a property is under insured.
"Carrying out regular valuations is essential to ensure property owners are not left out-of-pocket should they need to make a claim in respect of their property."
The Royal Institution of Chartered Surveyors (RICS) recommends that a reinstatement cost assessment (RCA) should be carried out at a minimum of every three to five years. Property owners' insurance policies make it a policy condition that regular valuations are carried out by a RICS qualified surveyor, normally every three years, although this depends on the insurer.
In a recent on-line article published by RICS they said: "The Insurance Act, which came into force in August 2016, contains important changes, which those in the
There are two types of policy cover. A building can be insured on a 'reinstatement basis' where the amount of indemnification is determined by the cost of repair or reconstruction at the time of the loss rather than at the start of the insurance period. This means the sum insured at the start of the insurance year must include an adequate allowance for inflation both during the insurance period and during the rebuilding period, which may be longer.
The alternative is 'day one reinstatement basis' method, where the actual rebuilding cost is set as at the first day of the insurance period. Inflation is included automatically in the policy. This represents good value for money as the insurer may only charge, for example, 5% of the full rate for an inflation provision of 30%.
Caxtons Commercial Limited is an Appointed Representative of Morrison Edwards Insurance Services Limited which is authorised and regulated by the Financial Conduct Authority.
Once again, Caxtons has been awarded 'EGi Deals Winner Kent' - the prestigious property industry award for commercial property agencies. Winning the 2017 award for the sixth time in seven years is the result of Caxtons outperforming all other commercial property agencies across Kent.
This award is judged on the number of successfully completed commercial property sales and lettings 'deals' secured in the preceding twelve-months.
James Roberts, from Caxtons in Canterbury said, "We are delighted that again we have secured the award, which only reinforces our standing as one of the first-choice commercial property agencies in Kent and beyond.
"The commercial market is undergoing change, not least because of uncertainty caused by the Brexit vote. However, the market is still moving apace and commercial property is still a good longer-term investment. As businesses grow their property requirements change, so there will always be a need for commercial premises. Having said that, there is still a dearth of certain types of property which can prove difficult, but thankfully, deals are still being successfully achieved."
In what has been, at times, a challenging year in the commercial property sector, Caxtons again improved on the level of activity it was able to achieve in previous years.
Caxtons' Commercial Agency team is as busy as ever and keen to continue selling and letting more commercial property than any other agent in Kent.
Estates Gazette is the well respected, leading national property publication and its EGi website attracts more people seeking business premises than any of its competitors.
On the sofa with Chris Price
James Roberts, manager of Caxtons' commercial agency department in Canterbury, was invited by Kent Messenger's business editor Chris Price to join him on the sofa for a Chris & Co KMTV business interview.
Chris and James discussed the current position of the commercial property market in Kent. They covered a variety of aspects, including the county's shortage of commercial premises to provide space for businesses to grow organically – whether industrial or service sector based. In James' opinion, new build is essential to address the problem but developers need sensible margins to encourage them to proceed.
James' interview can be heard in full at https://www.youtube.com/watch?v=4wgbpomPzXw.
Caxtons is headline sponsor of and main contributor to the Kent Property Market Report, which can be read in full or downloaded at www.caxtons.com/useful-documents.
Kent's commercial property market has evolved significantly over recent years reaching a critical mass that leaves it well placed to weather the uncertainty over the UK's future relationship with Europe, according to the Kent Property Market Report 2016.
Produced by Caxtons Chartered Surveyors, Kent County Council and Locate in Kent, the report was launched at the Mercure Maidstone Great Danes Hotel today (November 3).
It says that the result of the EU referendum has taken its toll on expectations for the performance of the UK-wide property market. But, the outlook in Kent and Medway remains positive due to three key factors:
• The county now has a significant concentration of high value industries, which is attractive to relocating business seeking space;
• The relative affordability of business space on offer in the county also provides it with a competitive edge over many other South East locations, particularly given the significant improvements in the transport infrastructure;
• The county will also remain a vital gateway to continental Europe regardless of the impact of Brexit.
The report states: "Kent's occupational market has seen continued activity with little evidence of the derailment of lettings, a reflection of its strengths.
"Significantly, the county has seen growing demand from high value industries such as the life sciences, creative and technology, as well as those in the finance and business sector.
"High quality affordable office stock and accessibility to London and European markets that surpasses most south east locations are key drivers."
The upturn in demand has been reflected in rents, with those at all the county's major business parks now exceeding pre-recession peaks. A number of the county's town centre office markets saw record rents achieved. Looking ahead key regeneration schemes are expected to drive further uplifts, as centres build their appeal to new businesses and residents.
The industrial and distribution sector saw a year of strong demand, with the average prime rent rising by nearly 7% and with greater demand from more technical sectors, which the report says bodes well for long-term performance.
Turning to the retail sector, the report finds average prime rents in key centres rising slightly ahead of inflation, with levels in Tunbridge Wells, Sevenoaks and Dartford ahead of their pre-recession peaks. The average high street vacancy rate has fallen, while the average Health Index score has risen. The improvement in many of the county's coastal towns is particularly noteable.
It states: "The county's retail sector will not be immune to economic uncertainty, although Kent's historic and coastal towns are well placed to benefit from the sudden sharp depreciation of sterling attracting more tourist spending."
Much needed residential development is taking place across the county, with the improved market attracting developers from elsewhere in the South East, the report says.
It concludes: "Our new relationship with Europe undoubtedly creates uncertainty over future business fortunes. Certainly, the recent upturn in business investment in the UK, which is so important to the commercial property market, may be threatened.
"However, Kent is well placed to attract activity as maturing business clusters sustain vibrancy, delivering a virtuous circle of demand and economic activity."
Echoing that theme, in 2015/16, Locate in Kent, the county's investment promotion agency, helped 46 companies to set up, move to or expand in Kent, creating 1,386 jobs and retaining 1,085.
"While the Brexit process is likely to cause uncertainty in the future, what this year's Kent Property Market Report shows is that Kent and Medway has a thriving and vibrant economy, which coupled with its connectivity to the Channel Ports, airports and London and the rest of the country, make it an attractive proposition to companies looking to set up or relocate their operations," said Paul Wookey, Chief Executive of Locate in Kent.
Chairman of Caxtons, Ron Roser, said that in its fourth year as main sponsors of and contributor to the Kent Property Market Report, the firm is delighted this year's research confirms Kent is well positioned to withstand the uncertainties presented by impending Brexit negotiations.
In addition, he said that they been able to develop the Caxtons' Prime Rent and Yield Series, which will now be published half yearly.
He said: "Kent has outstripped London with house price rises at 13% and there has been a substantial increase in prime industrial rents. Compared to other areas across the South East the cost of business space is still competitive, which is attractive to relocating businesses.
"Continued activity in Kent's occupational market, combined with demand from high value industries, office, business park and the industrial and distribution sectors all bodes well – but never forgetting the uncertainties that the UK in general faces.
"Kent high street vacancy rates have fallen, bucking the general trend. Certain Kentish towns have seen prime rents rises above pre-recession levels with coastal towns being some of the main beneficiaries.
"Last year's report highlighted the development of almost 27,000 new homes in Kent and this has now begun with marked activity on development sites across the county.
"In general, connectivity and sustained regeneration continues to benefit Kent. This year's report reflects the positivity across the property sector in the county and we are delighted and look forward to a very busy year ahead."
Kent County Council's Cabinet Member for Economic Development Mark Dance said: "The year ahead will undoubtedly be challenging and there remain uncertainties, particularly with major elections in the USA, France and Germany.
"But this report shows us that, with substantial planned investment and developments, Kent and Medway offers some of the most exciting economic growth prospects in the South East.
"Kent remains an increasingly favourable business location, given the impact of rising prices in London and other parts of the South East, and the help and support KCC offers to business.
"Our location, despite the unknown effects of Brexit, will remain a vital gateway to continental Europe and the county an attractive place for both domestic and international business."
Launch team: (l to r) David Fitzsimmons, Chairman of Locate in Kent; Ron Roser, Chairman of Caxtons; Cllr Mark Dance of Kent County Council; guest speaker and Editor of Property Week, Liz Hamson; and Mark Coxon and David Gurton, both Directors of Caxtons
Caxtons has researched and compiled information for the Kent Property Market Report, and publishes the information in tandem with Kent County Council and Locate in Kent.
During the last recession, the Kent commercial property market, in particular, was seriously affected, with values dropping in some areas by as much as 40%.
The market began to recover in early 2014 and into 2015, with gradual, modest increases in rents and capital values in major property sectors; particularly within larger towns. Investment properties became particularly attractive, with many investors who had been priced out of London, regarding Kent values and returns as attractive prospects.
However, investor interest became noticeably more cautious in early 2016 and was put down to the prospect of the then looming EU referendum. On the other hand, the majority of the market continued as it had been since 2014; confidence was high and transactions continued. Then the UK voted to 'Brexit' the EU.
Now, daily articles inform on the impact of this decision and the potential outcomes. Businesses and correspondents differ in their opinion with some convinced that a recession is on the horizon, and others are quick to promote any positive aspects of Brexit.
Three BBC business news stories, all published during the dying days of July, illustrate this divergence.
The first is a report on the latest Office for National Statistics (ONS) figures showing that the UK second-quarter gross domestic product grew faster than expected – up to 0.6%, from 0.4% in the previous quarter.
The second documents how GlaxoSmithKline has announced it is to invest £275m to expand its UK manufacturing sites (http://www.bbc.co.uk/news/business-36901027), whilst the third recounts residential estate agency firm Foxtons has reported a 42% reduction in profits (http://www.bbc.co.uk/news/business-36922496).
In the immediate aftermath of the vote there was market turbulence, but in the last month transactions have continued and new instructions are being to be brought to the market.
Banks may reflect the uncertain post-Brexit mood in their lending, and some businesses could postpone decisions on expansion, investment and new premises.
One thing is for sure, that market sentiment has been affected by this uncertainty. However, it is easy to confuse other factors as being related to the Brexit decision. For example, the changes in Stamp Duty and Land Tax announced in the budget and introduced in April saw a rush for transactions to complete before the changes were implemented. This will have been reflected in the following quarters' figures.
It is still too early to judge the economic impact of the UK's decision to abandon its membership of the European Union and it would be easy to talk the country into a recession. But it is important to ask what we actually want.
Once Article 50 has been activated and negotiations between the EU and the UK commence, an eventual agreement for our future relationship with the EU will emerge. Thereafter, the market will be in a much better place to declare its considered reaction to this monumental decision.
However, there is no need for an immediate or knee-jerk reaction. Ashford is proceeding with a number of key development opportunities including leisure, commercial, residential and educational schemes; Ebbsfleet Garden City is progressing and permission has been granted for 154 new homes and a new 420-pupil primary school in Castle Hill, work is already under way on more than 470 homes and there is discussion on a commercial development around the station; and funding has been committed and a contractor appointed to deliver the St James 156,915 sq ft retail and leisure scheme in Dover.
So, for now, there is plenty to celebrate in the local market.
The Royal Institution of Chartered Surveyors created RICS Matrics to nurture the interests of members whether new to, or those not long in the profession of surveying.
RICS Matrics Kent members have recently voted for their new local group board and Caxtons' staff have been elected to places at the top table.
Caxtons has always supported its trainees and graduate members of staff and is delighted that the following staff have been elected to the board:
James Roberts, a Commercial Agency Manager at Caxtons in Canterbury has been elected as Vice Chariman. James specialises in acquiring and disposing of commercial property for a range of clients.
Kazeem Agboola has been re-appointed as Treasurer. Kazeem's day job is a Commercial Property Manager and he is based in Caxtons' Gravesend Head Office in Windmill Street.
Tatenda Metzger has been elected as the Student Liaison member. She is a graduate surveyor in the Professional Department at Head Office.
Finally, Tom Foster has been appointed as a committee member (without portfolio) and is a graduate surveyor in the Building Department in Gravesend.
The 40 local RICS Matrics groups provide a network, support and a voice for its members as well as a source of energy for the surveying profession.
It is youthful, forward thinking and provides an environment of inclusion for its newest members to grow and feel like an integral part of the RICS.
Activities at the Kent group includes a monthly event and sporting activities for fun and friendships but focuses on networking to engender long lasting contacts with other professionals and developing their skills.
The 2016 budget created a flare-up in government, but was there a stir in the property sector? Contrary to some rumours, there was no U-turn on stamp duty for purchasers of buy-to-let or second homes, and thus the 3% surcharge looks like it is here to stay.
One announcement that brought a smile to smaller investors was the announcement of new rates for commercial stamp duty land tax (SDLT).
George Osborne made his statement, saying that there would be 'big tax cuts for small firms'.
Charlotte Bland, Associate Director, Commercial Management and Investment said: 'The announced changes came into effect on property purchases completed on or after 17th March 2016 and it is true that this measure favours small investors, individuals, personal pension schemes and small / medium size property companies.
"Less SDLT will be due than before as long as the price of the property in question is below £1.05m.
"Prior to the announcement, on a commercial property purchase of £300,000, the stamp duty would have amounted to £9,000. Now it will be £4,500 – a real reduction of 50%.
"As with residential SDLT there is a rising scale of duty applied depending upon the purchase price which will now be applicable on "slices" of the value. On commercial property below £150,000 no stamp duty will be payable; on the next £100,000 of the purchase price the rate will be 2%; and a top rate of 5% will be due on any amount over £250,000"
This may attract more, smaller investors to the commercial property market, especially in light of the additional duty that residential buy-to-let investors will incur, coupled with the impending withdrawal of tax relief on mortgage interest rates.
Charlotte continued, "While commercial investments may be subject to more risk than residential property, on the plus side, relative returns are higher."
Also, the changes will now mean that an investor will achieve a higher return on any commercial investment purchased below £1.05m due to the reduced stamp duty they will now pay. The downside is that this change may lead to an increase in the value of properties for sale, as the market naturally re-adjusts and any saving on costs will be negated by increases prices.
Another downside of this change to SDLT is that purchases over £1m will be adversely affected and property price will be a deciding factor when calculating net returns. Larger investors – such as Pension Funds – will be disadvantaged with the stamp duty on a £10m property purchase increasing from £400,000 to £489,500.
However, the Chancellor assured his audience that only '9% of buyers would pay more than before, while the tax bills of 90% of purchasers would be cut or stay the same.'
For the fifth time in six years, Caxtons is delighted to have won the coveted property industry award 'EGi Deals Winner Kent' in 2016.
This award is based on the number of completed commercial property sales and lettings achieved in the preceding twelve-month period.
James Roberts, Caxtons' commercial agency manager in Canterbury said, "Once again, this strengthens our position in the commercial property market place and demonstrates that we consistently outperform our competitors.
"While property in general has produced improving returns in recent years, the commercial market proved to be less attractive as an investment. The lack of certain types of property has been difficult, and speculative development is still viewed as a risk. However, of late, commercial property has regained the ground it lost during the recession and prices have reached their peak of 2008."This improvement in the commercial market may reflect changes to stamp duty and the withdrawal of tax relief on mortgage interest rates due to impact the residential buy to let market."
Against all the odds, Caxtons improved on the high level of activity it was able to achieve in 2015, and the Caxtons'
Estates Gazette is the well respected, leading national property publication and its EGi website attracts more people seeking business premises than any of its competitors.
Statistics released by the British Retail Consortium and Springboard show improved footfall for retailers during January 2016, with a 1.2% increase on 2015 figures.
After a dreary December, which reflected a 2.2% fall in numbers on the previous year, this has brought hope to landlords and retailers who had been feeling the effect.
"The increase in footfall across all retail destination types, the first since December 2011, alongside the rise in spending in January, finally demonstrates what is well known - that bricks and mortar shopping environments are still important to consumers", said Diane Wehrle, marketing and insights director at Springboard.
And Caxtons' Commercial Agency office in Canterbury can confirm that new and independent retailers are once again opening up on 'the high street'.
With competition such as St James, a new retail development in Dover, attracting major high street brands such as Marks & Spencer, Next, Travelodge, Bella Italia, Nandos and Cineworld, it could leave traditional busy shopping and leisure areas neglected.
However, the good news is that this means vacant shop premises are available for independent traders to occupy, something they could not have envisaged when in
As a consequence, in the past two months Caxtons has agreed the letting of two Dover shops on new leases with a further two premises under offer.
Beverley Smallman from commercial agency said, "This is very positive news for a sector that has valiantly been fighting the effects of internet shopping, depleted numbers of customers and market share. It has seemed a desperate battle for the smaller independent traders, but now they are coming back to high street locations all over Kent and adding variety and interest to the shopping experience.
"At Caxtons we are getting many more enquiries from retailers wanting and needing a physical outlet, rather than the anonymity of a web based store. Of course, this does not preclude them from having and maintaining both platforms, and many of our tenants do. But it is really nice to see positive activity back on the high street once again."
For further information about commercial property stock contact Caxtons' commercial agency offices in Canterbury on 01227 788088, Maidstone on 01622 234886 and Crossways on 01474 567666.
With the upturn in business investment and employment growth, Kent and Medway's commercial property market is witnessing the return of rental growth, according to the Kent Property Market Report 2015.
Produced by Caxtons, Locate in Kent and Kent County Council, the report was launched at the Mecure Maidstone Great Danes Hotel on November 5, along with a new KCC-led initiative to ensure vital infrastructure is in place to support predicted growth in commercial and residential development.
The report is encouraging news for the office sector with the return of rental growth for the first time since the global financial crisis hit in 2008. While rental growth in the county is still slightly behind the national and south east averages, the report describes the upturn as significant.
Additionally, it states that the recent past has left rents in the county relatively affordable when compared to the rest of the south east, making Kent an attractive proposition for relocating and expanding businesses.
The county's key business parks of Crossways, Discovery Park, Gillingham Business Park, Kings Hill and Kent Science Park, all recorded important deals and investment announcements.
Kent's town centre office markets followed the national trend with many offices being converted to residential units thanks to the Permitted Development Rights legislation.
Elsewhere, rental growth in the county's warehouse sector of 0.2% outperformed UK and regional averages, while the retail sector also saw growth after five years of falling rents. With demand steady, and supply low, Kent has seen speculative industrial and distribution developments, including Ashford, Aylesford and Kingsnorth.
Caxtons' Chairman Ron Roser said that as main sponsor and contributor to the Kent Property Market Report, the firm was especially pleased to see that the continued improvement in the property sector is reflected in this year's research findings.
"Kent has mirrored other occupational office and industrial markets outside London in demand and rental growth. In turn, this has sustained investor interest, and when strong assets do come to the market there is increased interest and competition.
"Consumer confidence has fuelled the residential market with a promise of almost 27,000 new homes for the county. There is marked activity on development sites across the county. This buoyancy has proved to be an impetus to major regeneration schemes with a strong residential component.
"There is comparatively slower growth in the retail sector with limited rental improvement but business parks are experiencing a resurgence and in many cases, old office and dated office stock has been refreshed and converted to much needed residential dwellings.
"In general, improving infrastructure and on-going regeneration has positively and directly benefitted Kent, presenting us with many more opportunities than in the recent past. This year's Report reflects the buoyancy across the industry and it is welcomed by all."
A clear indication of the growth in demand in the county has come from Locate in Kent, the county's investment promotion agency, which helped 46 companies, 16 of them from overseas, to set up in the county in 2014/15, bringing with them 2,612 jobs.
"The Kent Property Market Report reflects the level of growth across the county, which is at its highest for many years," said Paul Wookey, Chief Executive of Locate in Kent.
"As property demand rises we have to ensure that we are attracting high quality developers to invest and bring new product to the market, whether they are new offices, retail development, warehousing or industrial space.
"We are fortunate that here in Kent, there are tremendous opportunities for those developers to deliver that space with support from local authorities, national Government and agencies such as ourselves."
In addition KCC leader Paul Carter unveiled a new initiative, the Kent and Medway Growth and Infrastructure Framework (GIF), which has been developed in collaboration with Medway Council, the 12 district authorities and health and utility sectors.
The GIF highlights the significant growth anticipated in Kent over the next 16 years and identifies £6.74bn of infrastructure developments required to support it. It also recognises a funding gap of £2.01bn which, if not addressed will impede the county's growth.
However, Kent County Council is taking action to address this and find innovative solutions, working with Medway and the Kent districts, Government, utilities companies and private sector, engaging with Government and other partners, including private sector investors, to meet that significant funding gap.
Commenting on the GIF initiative, Paul Carter said: "The GIF is an incredibly exciting opportunity for us to set the terms of the agenda for infrastructure in Kent and Medway with Government and the private sector. It tells a sobering story about the challenge we face in delivering the growth to which the 12 districts aspire, but it also gives us a unique chance to do something about it.
"The growth challenge we face in Kent and Medway is significant – to deliver the approximately 160,000 homes and over 135,000 jobs that local authorities are planning across the area to 2031, there is a £6.74bn bill for infrastructure, of which £2bn is unfunded.
"The resulting infrastructure challenge is one that we face collectively across local authorities, the development industry, our communities and national Government.
"The solution to this challenge will not come from the public sector alone, nor can we simply expect to get all of this from the industry; rather we need real innovation in how we work with the private sector and Government to get the most out of the resources we have, whilst introducing new ways of leveraging funding and capturing value from development.
"With the GIF and our 10 point action plan, we will be working with industry, public sector and communities to create the best opportunity for quality communities across Kent and Medway into the future."
The Kent Property Market Report is also supported by DHA Planning, Kreston Reeves, Cripps and RICS.
Following on from new Permitted Development rights that came into force in April 2013, the government has announced further changes to the rules (October 2015).
The 'temporary' scheme, originally introduced in 2013 to encourage developers and owners to convert offices, and more recently storage and distribution units, into much needed residential dwellings, will no longer be time restricted to May 2016. It will now be a permanent fixture, whilst new categories of light industrial buildings and launderettes have also been included in the list of premises able to benefit from conversion to homes under permitted development rights.
These changes form part of the wider General Permitted Development Order (GPDO) and override the necessity to submit planning applications for change of use as long as a number of conditions are adhered to.
In addition, Housing Minister Brandon Lewis said that the changes would allow for the demolition of office buildings to clear the way for new residential development, although prior approval will be required.
In his speech Mr Lewis said that under the temporary rights "almost 4,000 conversions were given the go-ahead between April 2014 and June this year".
Anyone who obtained permission under the temporary rules now has three years to complete their conversion – rather than by the previous cut-off date of May '16.
Exceptions do exist, for example some areas of towns and cities already cited as exempt from office to
Charlotte Bland, Associate Director at Caxtons said "This announcement regarding office to residential conversion rules is very welcome news for many owners and developers of commercial property.
"It takes the pressure off of those who have already started schemes to have them finished by May 2016, and also keeps the door open for others still considering taking advantage of the permitted development rights, which will assist in bringing new, and desperately needed housing stock onto the market.
"Whilst the scheme has considerably reduced the level of office space available to let, in many ways, particularly in weaker towns where demand dropped significantly during the recession, this is a positive change and has assisted in reducing the supply of older and obsolete premises, lessening availability and thus encouraging rental growth in the sector as well as speculative development of new, more modern business space. Consequently the changes bring about advantages for many, including investors, developers, businesses, and residential buyers alike."
Charlotte added "I would recommend that anyone considering change of use seeks professional advice at the earliest opportunity."
St Margaret's Street in Canterbury is one of the oldest thoroughfares in Canterbury city centre and has been a route for centuries of pilgrims who have travelled on their personal quests.
Caxtons is delighted to have let no.36 - a prime retail property on the corner of St Margaret's Street and Hawks Lane and close to the busy Marlowe shopping arcade at the centre of the city. The premises have been let on a new full repairing and insuring lease for £25,000 per annum exclusive.
The new tenant is Jack Kilpatrick who has 13 years experience in the hairdressing industry and is excited about his new venture. The 29-year-old is an award-winning stylist and takes part in numerous hair shows across the country- most recently a L'Oreal show in the Victoria and Albert Museum in London.
He said: "Jack Kilpatrick Hairspa is about offering a little bit of luxury in terms of experience-this is a chance to step away from the stresses of everyday life for a few hours, to relax and enjoy a cut, colour or finish with a top stylist who will walk the client through options to ensure that they get the best possible result."
Currently, the property comprises a ground floor work area of 39.03M² (420 FT²) plus a small office, kitchen /
The property was marketed jointly through Cedar Harp Limited, a firm of surveyors specialising in Commercial property management across England.
Canterbury is an exciting and energetic city with a thriving commercial, retail and educational sector. It is well served by the M2 with routes north to London and south to the coast and Europe beyond. Two rail links from Canterbury East and Canterbury West stations provide access to St Pancras and London Victoria, and improvements on the High Speed 1 line will open faster access to Ashford and Eurostar services.
Caxtons is located in Castle Street, just past the St Margaret's Street crossroads and near to where a medieval irons cross once stood. The Kent based firm has been celebrating its 25th anniversary throughout 2015 with a variety of client and staff events.
Commercial property lending increased by more than 50% and reached a six-year high by the end of 2014. According to the recent British Property Federation (BPF) report, this was due, in part, to non-traditional lenders entering the market in what is now an extremely busy commercial sector.
Insurance companies and other non-bank financiers were responsible for 25% of new loans, and whilst these lenders have only been included in the data since 2011, their market share increased significantly in the reporting period. These lenders came to the market '...due to regulatory changes and business opportunities created by the withdrawal of banks from this sector'.
The study also revealed that outstanding debt on
commercial property declined over the twelve-month period to year-end 2014.
In addition to general debt reduction, the report states that distressed loans also fell by more than 50% helped by a robust property market and, more generally, a strong UK economy. At year end there was a more even share of outstanding debt between the 12 top lenders.
Intentions to lend at the end of the period were strong and more than 80% of providers expressed a commitment to increase their loan book.
In tandem with property values, loan to value ratios had risen to 70% or less and made up more than 75% of the overall outstanding debt.
On 15th April new Permitted Development rights came into force providing a green flag to convert storage and distribution buildings (B8), used for that purpose for at least four years prior to 17 March 2014, into residential dwellings (C3).
The announcement comes after protracted government consultation and forms part of the wider General Permitted Development Order (GPDO), overriding the necessity to submit planning applications for change of use as long as the property does not exceed a maximum of 500 square meters floor space.
However, as expected, there are caveats.
Owners and developers must first consult with their local regulatory authority to establish whether certain permissions and prior approvals are required. The Explanatory Memorandum to The Town and Country Planning (General Permitted Development) (England) Order 2015 states "The right is subject to prior approval process covering transport and highways, air quality impacts on intended occupiers, noise impacts of the development, risks of contamination, flooding, and the impact the change of use would have on existing industrial uses and or storage or distribution uses"
Caxtons is once again delighted to have won the coveted property industry award 'EGi Deals Winner Kent 2015'.
This award is based on the number of commercial property sales and lettings achieved in the preceding twelve-month period. When compared to the previous year, Caxtons' results showed a 120% increase in the number of completed deals. This is the fourth time in the past five years that Caxtons has received the award and strengthens its position in the market place, demonstrating that it consistently outperforms its competitors.
Against all the odds, Caxtons improved upon the high
level of activity it was able to maintain even during the difficult market conditions of the recession, and the Caxtons' Commercial Agency team remains extremely busy, having sold and let more commercial property than any other agent in Kent.
Recently, The Financial Times published an article highlighting that up to 20 per cent of British office buildings will become un-lettable when new energy efficiency measures come into effect in April 2018.
Mark Coxon, director and head of Commercial Agency commented: "Owners of offices that currently fall into the F and G energy efficiency categories – the two lowest that a property can be awarded – should consider how they can improve their rating and act as soon as possible.
James Logan, Associate Director at Caxtons Chartered Surveyors, was recently asked to provide expert opinion on the BBC One television programme Homes Under the Hammer.
James, who works out of Caxtons' Canterbury office, specialises in commercial property and was pleased when this popular daytime programme, known primarily for featuring residential properties sold at auction, asked for his input.
Located over four floors, this prime property was sold at auction in March 2013 for £114,000. Having applied for and been granted change of use the new owner set about extensive refurbishment, dividing the property into a retail unit on the ground floor with a staff area in the basement, creating a new access to the two floors above, which were then converted into a two-bedroom maisonette. The entire refurbishment cost in the region of £43,000 making a total investment for the purchaser of £157,000.
Driven by a surge in consumer confidence, the UK economy is gathering momentum, which in turn has led to growing interest in property investment.
Currently, savings accounts only pay 1-2% whereas property can offer more attractive returns ranging from about 5 to 10% plus.
Representing the lowest risk but still producing initial yields of 4.5 to 6%, are residential properties, prime offices, retail units and retail warehouses.
Higher risk properties can offer more than 9 %, for example, retail units in secondary locations, older offices and industrial properties.
Property offers the potential for diversification, both in terms of type and location, thereby reducing risk. A typical portfolio may include both residential and commercial property and within the commercial element, a balance of retail, industrial and office property.
Another significant attraction is the prospect of exploiting asset management opportunities. For example, converting disused parts of shops to residential use, thereby enhancing income; renegotiating leases; obtaining planning permission for change of use or by extending or converting the property.
Chancellor of the Exchequer, George Osborne's 2014 budget saw what has been hailed as the most radical overhaul of the pensions system in nearly a century, and as a result will now give savers the opportunity to withdraw large lump sums from their pensions to reinvest as they see fit, potentially in higher yielding assets such as property.
Prior to the introduction of the changes, due to take effect from April 2015, individuals who have built up a lump sum in a defined contribution or money purchase pension have the option of either keeping their fund invested and receiving an income drawdown, or exchanging their savings for an annuity. There has been the option of making withdrawals of up to £18,000 but some believe very few have taken advantage of this due to the complex rules which surround it.
Closely linked to the return on annuities, the 15 year gilt yield currently stands at 3.22% and has seen increases over the last 6 months, although, some expect it to experience limited growth going forward.
However, the pension changes mean that savers will no longer be pushed into buying annuities. They will instead benefit from the flexibility of being able to access the entirety of their pension at any time after the age of 55, although withdrawn funds will be subject to income tax at marginal rates on 75% of the total amount whilst 25% remains tax-free.
Police action, recent price falls and a ban on paying cash for scrap metal may well be helping to cut metal theft, but unoccupied commercial buildings are still a lucrative target for thieves.
Criminals began targeting metal, such as lead and copper, after prices trebled and hit record highs in 2011, which have lasted until this year.
Insurer Zurich Insurance plc reports that since 2004 there has been an increase of around 2,500 per cent in the total cost of losses over £25,000 for its real estate clients.
Buildings most at risk are vacant factories and warehouses located on remote or isolated industrial parks.
These buildings often have high power demands and, as a result, service cables are relatively accessible. They also tend to have some form of lead roofing or flashing on or around the roof area.
Offices on business parks are less attractive due to lower electrical demands. However, secluded locations can still make them a target for persistent thieves.
Morag Keohane, insurance manager at Caxtons, said: "If you own a commercial property that has become vacant you need to inform your insurer immediately.