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South West commercial property market review for 2014 and forecast for 2015By: James Woodard

Clifton suspension bridge, BristolFor the first time since the economic downturn in 2008, there is a real energy within the commercial property market in the South West.

2014 has certainly been a year of renewed confidence and buoyancy, which has generated a great sense of enthusiasm from developers, landlords and tenants for the next 12 months and beyond.

It is fair to say that, in general, the South West has weathered the economic downturn well compared to other regions in the country and this has led to a faster recovery that has no doubt been a key attraction.

The South West, and particularly cities like Bristol and Exeter, and Cardiff in Wales, has felt the benefits of its location relative to London: close enough to attract leading restaurant brands and major companies looking to expand outside the capital, yet far enough away to offer a competitive, cost-effective option for start-up niche independents, both home-grown and from other towns and cities.

Opportunities in the South West 

The South West has become in vogue for all sectors during 2014. A degree of trendiness and stylishness is now associated with the region.

Bristol is unique in that it has three new residential, retail and leisure schemes coming out the ground for 2015 occupation, and few cities can say that. The General Hospital redevelopment, Wapping Wharf, and Finzells Reach all occupy great locations, with the latter two offering office space, too.

They represent fantastic opportunities in a city with surprisingly few waterside options. Interestingly, all three developers are quite vocal in seeking independents from within the city as occupants, as they feel these operators can help brand their residential elements as distinctive rather than mainstream.

Retail perspective

In terms of retail, 2014 has been the year of the discounter, whether it be clothing or single price retailers. The growing popularity of this type of outlet and the increasing number of convenience food stores has resulted in low vacancy rates in South West towns and cities.

For a short time, there was a negative perception surrounding discount stores but there has been a period of adjustment and the truth is that they have tapped in to a consumer need at a time when shoppers are still being wise with how they spend their money.

A great example of this is Galleries shopping centre in Bristol, which was hit hard by the opening of the more upmarket Cabot Circus in 2008. This year, Galleries has really found its feet as a discount option and as a result has recently completed two new fashion lettings to Peacocks and Pulp. Both of these will have certainly enjoyed tenant-friendly deals, but it would be naïve to think that was the only reason for their opening – operators can now see the potential trade of this pitch, and will have turned down several options outside the scheme to take their units.

Rejuvination is key

Other parts of Bristol have also managed to reposition themselves and are once again seeing some very positive activity. The Old City area is now home to some of the best restaurants, coffee bars and cafes that the city has seen after years of being known purely as a drinking pitch.

Repositioning an area and projecting a new identity to attract new customers and tenants has become a key element of rejuvenating our towns and cities.

Some locations, such as Plymouth, where there is an over-supply of poorer quality units and high rateable values, are continuing to struggle at the moment. There are plenty of operators looking to take units, just not enough suitable affordable spaces. During 2015 this issue has to be addressed. The chancellor’s Autumn Statement announcement on business rates provides some optimism that this aspect at least will be looked at.

The challenge for 2015, and what could potentially hold the market back, is the shortage of larger units (3,500 sq ft plus) in town centres across the South West market towns. In Devon and Cornwall in particular, there are a notable number of small/medium out-of-town developments being planned to accommodate this supply and demand issue.

This time last year, the commercial property market in the South West was looking very different to how it is now. Not many people would have predicted it to have picked up quite as fast as it has done.

It is clear, however, that there is strong occupier demand for property across most sectors in the South West as developers, investors and occupiers look for more cost-effective options.

Developments in the market throughout 2014 have certainly laid very firm foundations for an extremely positive 2015.

About the author

James Woodward, Sanderson WeatherallJames Woodard is an associate partner at Sanderson Weatherall LLP, a firm of chartered surveyors and property consultants in Bristol 

Features December 2014

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