Commercial Office Sector Struggling - Is It Time to Sell?
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The market for commercial office space has shared the turmoil of the wider commercial property sector over the last few years. Commercial office values rose significantly, during the property market price bubble prior to 2007, only to crash spectacularly along with the rest of the market when credit dried up- UK commercial office capital values plunged by 30-40% by early 2009.
Since then, the commercial office market has limped back somewhat, to partially recoup these losses. The commercial office sector in the West End of London, in particular, has seen some quite reasonable growth over the last year. However, rather than that being the start of a renewed bull market, this should be seen as a localised blip related to special factors such as overseas money taking advantage of exchange rates.
First of all, the rise in commercial office values, in the West End, seems to have been stimulated by a burst of activity from the investment funds, with a strong competition between domestic and foreign capital for 'trophy assets' in London. Those funds now seem to have allocated all the capital available for this spending spree and the fizz has gone out of this section of the market recently.
Secondly, there are several more negative reports that imply a turn down in value of commercial office property. The latest King Sturge Office Enquiry report (covering Q2 2010) states that there is a down trend to office demand:
"The level of enquiries for office space fell by 12% quarter-on-quarter in the three months to the end of June"
Also, more anecdotal evidence, in the form of bankruptcies for owners of commercial office complexes, for example the Estates Gazette reported 3 July 2010 that:
"A regional office portfolio bought in the boom has been put up for sale by LPA receivers. The multi-let portfolio is being marketed for £40m, 50% lower than the total paid for the assets in 2007. The new owner, Lloyds, called in receivers three months ago".
And another factor, likely to kick the market downwards, is the wielding of the axe by central and local government- in the UK approximately 20% of commercial office capacity is occupied by government related organisations. As those cuts bite, and departments close, so office space will become vacant. This will lead to tougher conditions for owners, lower rents, and, inevitably, more bankruptcies.
Given this negative sentiment, now would seem a good point for those able to sell their commercial office properties to do so. But where speed is of the essence, and buyers may be thin on the ground, commercial estate agents may not be your best starting point.
A much stronger contender to help you realise your property's value is SellMyCommercialProperty. We can buy commercial office premises from you direct, as we are an investment company with access to substantial lines of finance.
If you were to get in touch with us at SellMyCommercialProperty now, we could have an initial assessment completed within 48 hours. The sale of your premises can be brought about faster than you might think possible, and with no agent fees. So look into making SellMyCommercialProperty your way out of the commercial office sector whilst you are still ahead of the market.
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