Commercial lets increase
Commercial property lettings are proving to be an important income earner on many of Britain’s estates, according to a new survey.
Such assets now account for 14.3% of average estate income, almost double the level seen five years ago.
In area terms, that equates to £18.80/acre.
Although residential lettings account for a bigger slice of income at 40%, that figure changed little over the same period.
The survey, which covered 150 estates totalling more than 700,000 acres in 2005, found that average office rents stood at £8.94/sq ft, although this included some periods when premises were unoccupied.
“There are plenty of cases where in excess of £12/sq ft is achieved,” said Hugh Coghill, head of Savills’ rural property group.
“We anticipate that where rental levels are higher than average, the return on investment for conversion costs will yield between 10 and 12%.”
Retail rents averaged £7.21/sq ft, industrial rents £3/sq ft and rents for storage space £1.52/sq ft.
Letting activity was mainly concentrated in the eastern and southern areas of England, with a third of all new lets in the south east, a quarter in the east and a fifth in the south west.
The survey also shows that demand for commercial lets remains high, suggesting landowners had done their homework.
“It is essential that landowners research their market place and identify the niche areas peculiar to it before converting buildings,” Mr Coghill said.
Just over half of all lets secured tenants without any active marketing, he added.
Storage units went very quickly, but offices recorded the slowest uptake, with 47% taking more than 10 weeks to find a tenant.
However, once let, office space was likely to benefit from good occupancy levels.
Most tenants were also local, with seven out of 10 already in the area.
Only 11% came from more than 110 miles away.