Commercial Property Sales Need Reliable Sure Footed Buyers
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Find out what's really going on in the Commercial Property Space with Jason Werth, our MD and Commercial Property expert.
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Commercial property is an investment class that, like many others, has been subjected to turmoil over the last few years. And commercial offices have been something of a bellweather for direction of the larger market. So, where is the commercial office market heading now, and will they take the commercial property in the UK along for the ride?
One notable feature of the commercial office sector in the last year was a mini-revival in an important, but still small, part of the sector- the West London office market. The home of many 'trophy' offices, certain investment funds have thrown themselves in a bidding war over the last twelve months, with prices pushed up significantly. Is this in any way an indication of a more general market move?
Unfortunately not - the funds driving the blip seem to have used all the monies available for their trophy hunt and this section of the market is no longer fizzing. And more general sentiment is pointing towards falling commercial property prices. This can be seen in the drip feed of bankruptcies, and failed sales, by owners of commercial office space – as an example the 3 July 2010 Estates Gazette reported that:
"A regional office portfolio bought in the boom has been put up for sale by LPA receivers. The multi-let portfolio is being marketed for £40m, 50% lower than the total paid for the assets in 2007. The new owner, Lloyds, called in receivers three months ago."
These failures are being driven in part by cash flow short falls, as tenant vacancies have driven rent levels down, and also by the lack of access to finance, due to tight credit conditions. Additionally, the most recent King Sturge Office Enquiry report (which covers Q2 2010) has seen a decline in office demand:
"The level of enquiries for office space fell by 12% quarter-on-quarter in the three months to the end of June."
This can only have a negative impact on future commercial property prices. Finally a big shadow is cast over the market by the wielding of the axe by local and central government. With nearly 20% of commercial office space taken up by government offices, or organisations related to government activity, when budgets are slashed and departments close so more offices will become vacant. This will lead to lower rents, and, inevitably, more bankruptcies. The cumulative effect of all these factors is to drive commercial office capital values down further.
So, tough conditions for owners appear likely to continue- and maybe now is the time to sell commercial property, before the banks start foreclosing your loans. With such a gloomy outlook and with speed of sales execution likely to be a big factor in getting out at the right moment, whom can you turn to buy your commercial property?
One stand out buyer right now is SellMyCommercialProperty – we are a company with access to significant lines of finance, looking to place those funds into commercial property. We can move quickly, being able to make initial assessments of value within 48 hours. A sale could then be agreed speedily, without agency fees, and at a fair market price. So if you want out of the market before your bank ensnares you in it, get in touch with us at SellMyCommercialProperty - we can put you in control of your commercial property sale.
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