In Plymouth speculative development remains elusive despite positive indicators. The industrial market is attracting a broad range of occupiers and investors buoyed by the rapidly improving economic backdrop and greater external demand for UK exports.
The prime supply constraints that plagued the market in 2013 show little signs of easing. This has resulted in forcing occupiers and investors to broaden their search criteria and to consider well located secondary stock.
With the logistics and distribution market achieving growth on the back of the success of online sales channels and niche e-retailers entering the market in volume, the demand for fit for purpose, Grade A warehouse stock appears ready to grow.
The supply of good quality second hand and new space remains low, particularly in the absence of any large scale speculative development and where supply is tight there is evidence of headline rental and capital growth.
Manufacturing data shows strong order books partly in response to improving domestic demand but also international demand. The recent strength of sterling does not seem to have undermined exporters as much as previously thought.
Rental growth is evident UK wide spurred by a lack of quality space. Whilst this story is certainly not new and despite positive noises, development is struggling to gain traction in the absence of support from banks.
Pure speculative development funding is still generally absent from the market and the status quo looks set to continue for the moment.
The commercial market anticipates another strong year for investors, albeit there will be challenges such as falling oil prices and many with one eye on the Bank of England and a potential rise in interest rates.
Locally, we are anticipating increased levels of occupier activity. This will be tempered by supply and demand issues as in many towns across the south west, but does this mean there will be return of speculative development for the first time in more than five years?
Pressure on commercial space may result in rental growth, something that will please landlords up and down the country.
Other challenges include the reform of the business rates system and the fact retailers continue to be threatened by online industries and changes to stamp duty.