Ask the Expert - commercial property
Q: Do you anticipate more public sector property moves and relocations, such as the move of Nottingham City Council?
As a function of the cost saving initiatives implemented by the new government, we anticipate continued activity from the public sector. Much closer attention is being given to key property events, such as lease breaks and expiries within the civil estates portfolio. Analysis of their operational requirements is likely to identify cost savings through property efficiencies, often through consolidation if the head count is reduced through redundancies or outsourcing. Opportunities for multi-department co-location are likely to exist where both premises and services can be shared. In many cases, taking new space that requires less maintance and lower running costs contributes towards the business case.
My business is based in Nottingham, but we could probably save money by moving to an out-of town location – is it generally cost-effective and can you recommend anywhere?
In and out of town office rents within the Nottingham market are comparable. Opportunities exist where there is an over supply of competing space; currently, this is amongst the second-hand stock within the city centre and out of town/M1 corridor office parks. Better quality freehold stock within the centre is limited with greater levels of availability out of town. Much of the out of town stock is less than 15 years old, providing modern, open-plan space that is generally cheaper to run than a lot of the dated city centre stock. In terms of recommending anywhere; the motorway business parks such as Sherwood Park at J27 offer heavily incentivised deals, or for an option close to the city centre, balancing quality with value, ng2 Business Park is an established favourite.
My business operates from a small city centre office space, but we’re thinking about upgrading – is it still a buyers’ market in the region? Should I be asking for discounts from agents?
The current conditions within the UK property market make now a good time for businesses to acquire new space. This is due to a fall in demand and in certain markets an over supply of office space combined with constraints on property funding impacting on businesses buying space. There are certain hotspots where a tight supply has meant pricing levels have largely been maintained; elsewhere, the competing supply has allowed occupiers to negotiate significant incentive packages and discounts from developers and landlords. In most cases, the agents will be willing to discuss incentives and in many of the acquisitions we have undertaken these have been substantial. We are already seeing in certain locations the level of supply starting to reduce, with negligible speculative development bringing new stock into the market conditions could be created whereby pricing improves and the incentives packages reduce.
Matthew Smith is a senior partner at Jones Lang LaSalle in Nottingham.