Commercial Property & Business

We asked local commercial property specialist Phil Graves, Director at Graves Jenkins and Vice President of the Brighton & Hove Estate Agents Association, to provide his most up to date views.

History informs us that the rise and fall of the residential property market acts as an indicator for the commercial property scene. It is also true that the general cost of money for property purchases dictates the level of activity in that particular market place. Of course, if predicting market trends were that simple then we could all have an opinion and in fact it is that point alone which makes the property market such a common discussion topic – we all do have an opinion as knowledge of prices is now at everyone’s fingertips due to resources such as the internet. The majority of us are stakeholders through property ownership and we all have a working knowledge of our property’s value.

This is where the commercial property market is different.

The majority of commercial property occupation is leasehold and in a buoyant market paying premiums (ingoing ‘key money’) is commonplace. You could have two retail premises adjacent to each other, but due to different lease terms, the values could vary greatly. I mention retail outlets primarily, which would include licensed premises and catering, as it is unlikely that premiums can be achieved on office or industrial premises, unless they are below market rent or offer something unique, which is unusual.

Since the summer last year, the UK economy has experienced some dramatic changes and business in general is both tough and challenging. The interesting fact though is that since the turn of the New Year, transaction levels have been restored to their former levels and there are a number of new, good quality commercial enquiries that remain unsuited.

So why?

Firstly, the enquiries need to be quantified. Due to the lack of bank finance, the vast majority of enquiries are from tenants as opposed to buyers. The investment and owner occupation market is very quiet.

Secondly, Landlords are now responsible for empty rates on commercial property and this has ‘forced their arm’ to be more approachable on rent levels, short-term leases, rent free periods and in some cases, quality of tenant. Arguably, if a Company is seeking alternative premises now, then they could be able to strike a better deal than both last year or next.

Finally, some sectors of the economy continue to do well. We are blessed with a number of quality digital media Companies in Brighton and Hove and world-renowned brand names are being attracted to the City such as Sony and Walt Disney. The City Council, the Universities, plus private and corporate parties have invested greatly in recent years setting up a sustainable infrastructure and this is now paying dividends. Occupational redundancy and job insecurity inspires entrepreneurial spirit and there are a number of new enterprises starting up and our City has always been a place to attract such people. This provides the place with its unique character and interest for visitors and residents alike.

An interesting fact is that ?% of companies in the area employ less than ? people. This has and always will be the case and therefore whether we are in recessionary times or not, unfortunately there will always be business casualties. Some businesses will come and go, but Brighton and Hove will always stay on the map as a great place to live and work.