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Commercial/industrial scene: Nervous or just cautious?
Over the last month Doolittle & Dalley have noticed a marked increased in enquiry for all types of commercial or industrial property in and around the Wyre Forest area.
However converting enquiries into sales or lettings requires a gentle approach and there still seems to be an underlying reluctance by both purchasers and prospective tenants to actually commit and take on a new property.
Some seem to think that owning their own business is the only way forward and have probably applied for many jobs and have found that hundreds of other people have also applied. An area can only support so many hairdressers, nail bars, restaurants and takeaways and these are the types of business which many seem to think is the road to riches.
In an economy which is growing and where the population have confidence to spend money, then these businesses do well but in the current economic climate unless applicants have the reputation, expertise and above all a business head then some of these businesses are doomed to failure from the onset.
Fortunately recently we have completed lettings of premises for hairdressers, nail bars and restaurants and an agent now almost needs a crystal ball to try and predict whether these businesses will succeed.
The procedures put in place by Doolittle & Dalley are such that applicants are assessed not just financially, but also as to whether they have the expertise, drive and know how to make their businesses work.
There is no point letting a shop that a landlord in a year’s time has to take possession of and ultimately action against a tenant for arrears. Some would say that to have a shop occupied if for only one year, at least relieves the land lord of having to pay non-domestic rates whilst the property is empty and any letting is classed as damage limitation, in that at least the landlord will receive some rent and not have to pay the non domestic rates.
This is not a policy that we endorse and we try to ensure that any prospective tenants having paid the capital costs of setting up a lease or agreement, that they will survive and be able to grow the business.
In some instances rent incentives are offered and in many cases break clauses are incorporated into leases, such that if the economy does not strengthen as predicted and these new businesses can not survive, then at least there is an exit.
High street trading has seen difficult times in the past but as on line retailing continues to grow, this is a new pressure for which retail shops have not had to contend with in the past.
We have proved that with extensive advertising and promotion there is a demand for small shops and thankfully many of the shops which have been let over the last year are surviving and recently we have let to those who are expanding their businesses into the area and have the confidence knowing that the level of service they offer and the range of goods for sale will attract local shoppers away from the retail parks and into town centres.
Gaining a good reputation and word of mouth still help small businesses establish and flourish and that is the one advantage they have over internet shopping.
It is becoming abundantly clear that town centre rents are having to be adjusted down in order to attract large retailers and until these rents are affordable for new businesses then large shop units will stay empty.
The enquiries for industrial property. in particular small units. has improved, but obtaining a commitment from a prospective tenant is more difficult as there is intense competition between landlords to secure occupiers and in some cases prospective tenants we have had seem confused with the variety of deals being put to them by landlords trying to attract them to the units they have available.
A low rent can often be an enticement but then service charges can inflate potential running costs to the extent whereby there is no real saving from what would have been the original rent.
It is important that tenants examine carefully the terms that have been offered. There are exceptionally good deals available including rent free periods, reduced rents for the first years and break options to name but a few, and it is easy to see why potential occupiers are confused hesitant and nervous; as for some it will be their first encounter as self employed and funding a business with their own capital.
Kidderminster has a long association with manufacturing and it is only 50 years ago that the carpet industry was the major employer in the town and the number of carpet manufacturers within the town centre area dominated land use.
The traditional north light factories were everywhere and many of these buildings were of Victorian origin built to last and over 100 years old. Nowadays commercial buildings only constructed 40 or 50 years ago either have been or are soon to be demolished for redevelopment and commercial buildings today may only last 50 years before being redeveloped.
It is a sad state that redevelopment takes place so quickly and the heart of character of a town can be ripped out as the needs and demands of an area for places to work change.
It is good that some choose to refurbish buildings rather than demolish, and an excellent example that has recently been completed is the refurbishment of the 1960s office block in Stourport Road, Kidderminster, completed by Wyre Forest Community Housing.
A former office block which had become redundant and which was in a neglected condition has now been transformed and provides excellent modern office accommodation.
Refurbishment of commercial buildings should be considered more, rather than demolition and replacement with temporary structures. This not only retains the character of the area but also refurbishment can be much more eco friendly than demolition and rebuilding.
It is hoped that despite austerity measures introduced by the Government that the Wyre Forest area will continue to be noticed as an area where there is scope for considerable economic growth.
It is hoped that confidence will return such that business growth will be sustained.
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