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For a number of years the UK commercial property has witnessed a terrific rise in growth. The area is undoubtedly booming with vast swathes of money coming from overseas, some 32% in 2015 coming from international investors, which is up from 20% the previous two years.

With all this investment, can the market keep up? According to predictions from CBRE, they say the volume of investment has potentially reached its peak. They predict the current cycle to come in slightly above the last cyclical peak in 2006 of £62 billion. The company have predicted that real estate prices will remain ‘fairly high’, but returns are likely to decline by 2020 as rental growth begins to moderate. Savills also believe 2016 will continue where a strong 2015 left off, but in a slightly different manner. They expect to see an increased investor focus on rental growth and income returns, alongside value-adding strategies such as refurbishment and development. Savills predict the overall investment volume to be slightly lower than the record highs in 2015.

So what are we likely to see in 2016?

2016 is likely to be another very good year for commercial property with prices continuing to remain strong and not set to falter just yet. The low interest rate environment, plus high and stable income yields mean UK commercial property is still proving to be an alluring attraction to new investors.

The long trend in strong values over the last few years however is having an opposite effect for some buyers, who are becoming slightly more cautious with an expectation that the market might start to tip the other way at some point. Despite this, the sheer volume of investment is at, or close to, record levels in some areas of the market.

North West Investment

If you have a quick scan across the Manchester skyline you will notice a gluttony of cranes, highlighting the growing development trend as various schemes continue to take place across the region. For the North West this commercial property bubble could continue to expand for some time.

There are a number of developments currently on-going in Manchester City Centre, including 267,000 sq ft of office space at No. 1 Spinningfields which will be ready in 2017. Planning applications were also submitted last October for two new buildings at the £800 million NOMA development, home to The Co-operative Group.

There is also plenty of development just outside the city borders, especially around the Salford Quays region, home to MediaCityUK. A £10 million Grade A office development has just been completed at the Exchange Quay after the 433,637 sq ft space was acquired by Hunters in 2013, which is already attracting large companies. This represents a significant investment into the North West office market, which currently needs much more space accommodate the growing demand.

The Commercial Property department at Gorvins is as busy as ever as we continue to provide first-rate legal advice to our clients. To speak to one of our experienced solicitors about your commercial property manner, don’t hesitate to give us a call on 0161 930 5151.