The Welsh Commercial Property Market Review 2019

The Welsh Industrial Property Market

With the abolition of the Severn Bridge tolls commercial property agents were expecting an increase in demand for industrial space across south-east Wales, and this has certainly proven to be the case. However, we are all still left wondering would could have been, if this news was followed up by a positive announcement on the M4 relief road. This was not meant to be.  

What this has meant is an increase in overall demand in the area, but the greatest level of interest is those seeking space from Chepstow to the eastern side of Newport, avoiding the Brynglas Tunnels.  

Having recently advised a client to purchase 55 acres of industrial development at Gwent Europark in Magor, this has certainly played into their hands. The fundamentals of the industrial market in south-east Wales remain the same: good demand & poor supply. With very little new development over the last 10 – 15 years, there is a real shortage of good quality space across the region. Unless we address this, we will not be able to capitalise on the potential that is there to be exploited.  

Developers and landlords who have been brave and speculated have been rewarded, and not just along the M4 corridor. New development at Mamhilad (Pontypool) has been well received and is pretty much fully let. Clients of ours are developing some new units at Crown Business Park, Tredegar and we have let half of them during construction and have interest in all remaining units. However, key to all of this is buying the land at the right price and keeping a close eye on construction costs.  Whilst industrial rents are on the rise in south-east Wales, they need to keep moving upwards to attract more developers to build in the region.  

Newport Offices 

Q3 2019: UK Commercial Property Market Survey by the RICS recently suggested that demand for office space on a national basis fell by 9%. This is certainly not our experience, particularly with regards to Newport. Anecdotally, we believe office demand in Newport over the last six months has been it’s highest for at least 10 years. The difficulty once again is having suitable offices to offer to these potential occupiers.  

It has long be recognised that Newport needs to attract more office workers to the city centre. These will use the shops and leisure facilities on offer, bringing much needed custom to the city centre. With developments taking place at Chartist Tower and the former sorting office at Mill Street, much needed supply will be coming forward. However, we need to ensure that we provide a range of space in terms of quality and price. A similar story can be said for Chepstow, Cwmbran and other towns where the availability of good quality offices, ready for immediate occupation is just not there.  

We have just been appointed to market Clarence House in Newport – a city centre office of over 80,000 sq ft. With refurbishment works planned for the building, we are positioning the building to appeal to those who require functional and affordable space with great access to public transport and all the facilities of the city centre. Uniquely for Newport, the building also houses serviced apartments available to rent for one night, upto three months. This is proving very popular with those businesses who regularly have staff from other offices come to work with them on projects for weeks at a time and who do not wish to be stuck in a hotel room!  

Local Welsh Retail 

Retail property is by far the most difficult sector at the current time. This is not just in south-east Wales but across the whole of the UK.  The Q3 2019: UK Commercial Property Market Survey by the RICS recently suggested that retail demand is falling with approximate 60% suggesting this was the case. Walk around almost any city or town centre in Wales and you will see evidence of this.  

Newport has been worst hit by the changes to retail property in recent years with a significant amount of empty shops across the city. However, this is as much to do with an over supply and is it to a lack of demand. Attracting new national retailers to the city centre is proving difficult and we believe there is likely to be further consolidation from Commercial Street into Friars Walk and Kingsway Shopping centre over the next 12 – 24 months.  

We have long suggested that Newport needs a retailing identity in order to attract customers back to it. It needs to be different to Cardiff and Bristol and even Cwmbran. Attracting local, independent retailers offering products and services which can’t be found in other cities and towns must be the way forward. However, unfortunately it appears that Newport hasn’t yet found its identity and doesn’t have a clear plan and strategy.