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Shortage of commercial space in city could result in a rental price hike

PUBLISHED: 15:30 04 January 2019 | UPDATED: 15:30 04 January 2019

18, Central Avenue, St Andrew's Business Park, Norwich: this 16,172 sqft, three storey building has just gone under offer with Arnolds Keys. Pic: www.arnoldskeys.com

18, Central Avenue, St Andrew's Business Park, Norwich: this 16,172 sqft, three storey building has just gone under offer with Arnolds Keys. Pic: www.arnoldskeys.com

Companies stockpiling items in the event of a no deal Brexit is causing such a shortage of good quality industrial space, agents are predicting rent rises that could make Norwich much more attractive to major investors.

Guy Gowing, managing partner, Arnolds Keys. Pic: www.edp24.co.ukGuy Gowing, managing partner, Arnolds Keys. Pic: www.edp24.co.uk

With warehouses in increased demand combined with a general shortage of supply of industrial space including good quality offices, agents are hopeful of a hike in achievable rental prices. And while this is not such good news for tenants, it does make the city a much more attractive investment proposition for developers keen to see a good return.

Prices are predicted to rise making Norwich more in line with values achieved in other cities like Cambridge and areas such as the fringes of London.

Guy Gowing, managing partner at Arnolds Keys, said: “The warehouse market is very tight at the moment, there is very little availability.

“The reasons can be to do with Brexit stockpiling - things like agrochemicals, for example, things like pesticide which need to be used at certain times.

“We, as agents, don’t know what warehouse stock is being used for but it does seem that Brexit is having an impact and it can also be a knock on effect; hauliers are 10-15% busier and warehouses are getting full.

“For example, I’ve never seen the Vulcan Road industrial estate in Norwich more busy, which has over 100 units.

“We are seeing increased investor demand because this sector is earmarked for such growth.”

Mr Gowing said warehouse prices in Norfolk were currently achieving between £4.50-£7.50 per square foot and the increased demand could push up values to more like £8-£10 per square foot, currently achieved in places such as on the fringes of central London.

Nick Dunn, a partner in the commercial department at Brown & Co, forecast a rise in the rental prices that could be achieved for office space too.

He said: “We are currently achieving rents of about £17.50 a square foot whereas in areas like Cambridge, it can be more like £35. There is a real shortage of good quality office and industrial space and with such a limited supply and healthy demand, it may hopefully push up prices, attracting the investment for new build.”

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