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.
Since Brexit, developers have reported that there has been no downturn in interest in homes in the Garden City and that it was “business as usual”.
The report 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.”
The Kent Property Market Report is also supported by Clague Architects, Cripps, DHA Planning, Kreston Reeves, Mitchell Design, RICS and Savills.