Office Property - Is the Market Telling You it's Time to Sell?
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Amongst the sectors of the commercial property market, the office property market has seen the wildest of journeys over the last few years. This reflects the importance of the services, and particularly financial services, to the economy - and the services sector has been hit hardest by the travails started by the credit crisis.
Office property rents fell sharply over the period of the 2007-8 crash, with the IPD UK Monthly Index Statement marking a 16.8% fall from peak to trough. Starting late 2009, rents did see a rally, with the office sector producing a 0.1% growth overall in Q2 2010- the first quarterly growth since the credit crisis.
However, if you dig deeper into those figures, it can be seen that most of that growth was driven by a spike in investment in London and West End office space. Stripping out those areas, the rest of the UK saw a 6.9% fall in rental values, and a 7.1 % slip down in capital growth (according to The Commercial Property Analyst Q1 2010 from Capital Economics). But is it possible that the London market is acting as a stimulant to the market overall, with values about to rise?
Sadly, there are plenty of indicators to the contrary- we may, in fact, be in line for another falling market for office property. For example, King Sturge has reported "...the level of enquiries for office space fell by 12% quarter-on-quarter in the three months to the end of June". Furthermore, the Investment Property Databank's Business Parks Index 2010 shows that rental growth fell to the lowest level in 10 years. And there is a constant drip feed of stories of failed office property deals, bankruptcies and downwardly revised forecasts.
So what is driving the office property market into such negative territory? Firstly, the fundamentals are disposed to a softening market- available office space supply remains much greater than demand. And the prospects for demand to fall further are very real, with the recent Budget announcements of swingeing cutbacks to governmental spending having a direct impact. With 20% of UK office space taken up by government associated organisations, those cutbacks will inevitably push vacancy rates up higher.
The general economic outlook is also pessimistic - the fear of a double dip recession has been heightened by the impact of Budget tax rises, a fiscal tightening and lower predicted bank lending. All of these are likely to subdue economic activity in the next twelve months, which will again hit demand for office property. This will be exacerbated even further as banks get harder with borrowers who fall into default and start repossessing more properties.
So if you are thinking now would be a good time to sell your office property space, and you want a fast sale, read on. SellMyCommercialProperty can help you. We have a dedicated and experienced team of valuers, able to operate at short notice, across the UK. So we can give you an initial assessment of your office property within 48 hours.
If the price is good, and you want to move fast, then we can buy your office premises too - we have access to substantial funds, and are not constrained by having to raise credit. SellMyCommercialProperty can push through to a sale faster than you might have expected, and all with no agency fees. So get in touch with us now, and let us help you realise a good price for your office property, before the market catches you out.
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