The return of a robust and vibrant property market for the first time since 2008 is highlighted in a March 2016 update of the Kent Property Market Report (KPMR) produced by Locate in Kent, Caxtons and Kent County Council.
While Investment Property Database (IPD) figures for the county are not yet available, the report uses other published information and local knowledge to draw conclusions about the current state of the Kent property market. It reviews property deals and activity throughout 2015 and early 2016 and showcases the substantial progress of investment and regeneration projects across the county.
Increasing office demand, particularly in London and the south-east, was mirrored in Kent leading to significant rental growth over the last six months. This continues the upturn seen since 2008. Despite this growth, rents in Kent are relatively affordable when compared to many other south east markets. As a result, accessible towns in the county offering a quality working environment are proving attractive to relocating and expanding businesses seeking greater value for money.
This is illustrated by deals covered in the report, such as the sale of Newspaper House in Canterbury to Canterbury City Council, and the letting of an office in Swanley to Orbit Southern. The county’s main business parks also saw significant lettings and sales, while a portfolio of five UK business parks including Kent Science Park was sold to Angelo Gordon in a joint venture with Trinity Investment Management.
Despite a slowing of the manufacturing sector, Kent’s industrial and distribution market is performing well. Kent has benefited from distribution sector growth as proved by several major lettings and sales within the sector. For example, at Capacity, Dartford, the old GSK site, TNT has taken a pre-let on a new 132,000 sq ft unit.
Kent’s retail rents have stabilised and investors have returned to the sector. Two of the county’s major shopping centres, Fremlin Walk in Maidstone and Whitefriars in Canterbury, have both recently sold. Numerous other units were let or sold including the letting of Unit 2, Galleon House in Maidstone to Century Residential Sales and Lettings, and there have been several new lettings at Bluewater. Rental growth in Kent’s retail warehouse sector outperformed both the UK and South East average.
The area updates section features current and planned developments across Kent and Medway. It focuses particularly on Kent’s growth areas including the Garden City in Ebbsfleet and the continuing regeneration of Kent’s coastal towns.
In addition, Kent’s existing successful Enterprise Zone at Discovery Park is covered, along with the new North Kent Innovation Zone (NKIZ), which includes the Kent Medical Campus in Maidstone, Rochester Airport Technology Park in Medway, and earmarked sites at Ebbsfleet Garden City. Between them, these sites will deliver over 2m sq ft of high quality business premises with the potential for 9,900 new jobs by 2027.
A number of schemes have progressed well or have completed, with the opening of the new Rochester station, the awarding of a £400 million contract to build a 1,300-home community over the next 12 years at Rochester Riverside to Countryside Properties and industrial units nearing completion at Orbital Park in Ashford. A planning application for a mixed use development at Stone Hill Park, previously Manston Airport, is expected within months.
Looking at investment prospects, the broadening in investment horizons in the search for value has amplified demand for property assets in Kent. The buoyancy and increasing diversity of the county’s office market has attracted particular attention. As a result the Kent/south east yield gap has narrowed sharply. The average office yield in the county fell to 8.3% at the end of 2014, its lowest level since 2007.
Over the same period, the investment yield for industrial and retail property in Kent hardened to 7% and 6% respectively, tracking movements in the south east average. Meanwhile, the average yield for retail warehouse assets in the county fell to 5.9%, equal to the South East average, reflecting the strength of this market.
The strategic developments pages of the report feature a map and comprehensive list of commercial sites and developments throughout Kent, as well as providing planning information, useful contact details and location map.
The report can be accessed at www.locateinkent.com/kpmrmarch16 or below.
Work on the full KPMR 2016 will start in June 2016, and will be launched on 3 November.
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