The latest inflation figures show another increase and this could persuade investors to start putting their money back into commercial property. We will have to wait and see if this was a blip or a trend that is set to continue over the next few months. The outlook generally is still mixed but the Bank of England belives inflationary pressure is only short term.
Rents have certainly stabilised and most commentators are predicting that they will rise throughout 2010. This is due to the lack of new developments being completed leading to a shortage of supply for quality space. This is all good news for landlords and means that tenants will need to negotiate hard to secure low rent levels and other incentives such as rent free periods
Capital values have risen by at least 5% since August 2009 but the big question is will this continue in 2010? This will depend on a number of risk factors that could send prices downwards and include the possibility that the market may become flooded from anticipated sales by the banks of assets that they have taken control of from distressed borrowers; rising interest rates and further company insolvencies.
It will be interesting to see how 2010 develops for the commercial property market so watch this space over the coming months!
Steve Petty
Commercial Property Solicitor
01926 629 005
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