Exclusive: Strong recovery for Swindon’s commercial property market, report shows

July 17, 2014
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Swindon’s commercial property market is back on track after hitting the buffers during the recession, a major new report shows – with the rail industry providing much of the growth.

The latest Market Monitor from property agents Alder King shows a turnaround in fortunes for Swindon, particularly in the key town centre office market.

The highly-respected report, which is published twice a year and analyses the markets in the region’s main towns and cities, concludes that Swindon’s office sector has enjoyed “the greatest level of take up for many years”.

This, it says, is the result of rail-related businesses taking space ahead of the electrification of the London-Bristol line.

Significant lettings in the town centre have been to Amey Rail and First Great Western in three town centre office buildings – Station Square, SN1 and Holbrook House. It also signals further rail-related transactions are on their way – but warns that the burst of activity is leading to a shortage of top-end office space.

Alder King’s Swindon office partner James Gregory said: “There is now a distinct lack of good quality office stock readily available in the town centre leading to various discussions regarding potential refurbishments of secondary stock.”

He also points out that several other poorer quality properties are likely to be converted to residential in the near future – following a trend already underway in Bristol and Bath where large out-dated office buildings are gaining new leases of life as housing.

The out-of-town office market was also bouncing back with the 34,000 sq ft (3,159 sq m) letting of Interface House at Royal Wootton Bassett to microchip firm Swindon Silicon Systems leading closely followed by the 29,000 sq ft (2,694 sq m) Trilogy building at Kembrey Park being le to Nationwide.

Rents were also inching up as a result of the lack of quality stock while incentives to occupiers which would have been offered by landlords just 12 months ago are now being reduced.

Demand for industrial buildings – an important market for Swindon – was also increasing with better quality inquiries coming through, according to the Market Monitor.

“Throughout the first half of 2014 [this] has been evident across all size ranges,” said Mr Gregory. “This is resulting in applicants making quicker decisions for fear of losing their preferred option to another party.”

The largest disposal was the 52,315 sq ft (4,860 sq m) former Biomet Building at Dorcan going to garden equipment firm G J Handy. Swindon-based J B Global, the firm behind the phenomenally successful Oak Furniture Land discount chain, underlined its commitment to the town by renewing the lease on its 207,000 sq ft (19,230 sq m) building at Cheney Manor.

Meanwhile, the increase in small inquiries and lack of quality stock has led to the first speculative development in the town for several years, including 20 small units and one of 35,000 sq ft (3,252 sq m) unit by Glenmore at Westmead. There is also a “distinct lack of buildings in excess of 60,000 sq ft (5,574 sq m)”, says the report, which has led to several being placed in solicitors’ hands which will complete later this year.

The lack of industrial supply is also driving down incentives for occupiers with rents, particularly in the smaller sector, under pressure to increase. “This demonstrates a distinct improvement in the level of confidence as occupiers show they are prepared to pay a premium for good quality stock,” said Mr Gregory.

The improved market conditions were not yet benefitting the town centre retail sector, the report says, with many units still on short-term lets. Plans to regenerate the town centre were going ahead with Swindon Borough Council and Forward Swindon active in assisting with schemes including the demolition of Aspen House.

The out-of-town retail market was boosted by Waitrose opening its first supermarket in Swindon and Morrisons building a 50,000 sq ft (4,645 sq m) supermarket at Dorcan.

Convenience operators including McDonalds and Subway continued to express interest in different locations on Great Western Way.

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