‘Interesting times’ for the commercial property sector


The last few years have been interesting to say the least. First Brexit, followed by Covid, then Omicron, and now there are the concerns of the effect of inflationary pressures on the commercial marketplace and occupier demand.

What we have learned is that a changing market creates opportunities for the landlord, the tenant, and the property investor, and that is why we should enter 2023 with optimism, not fear.

The industrial sector in the last few years has been ‘the golden ticket’ in the commercial property market with national, regional, and local growth in capital and rental values. The effects of Liz Truss’s economic policy were that overnight industrial capital values in the London marketplace lost 20%.

Property investors became nervous and saw this as an overheating market with capital values for industrial being higher than residential values in areas of the country. Like many market reactions there was a degree of overreaction to events and, since then, values in the London market have clawed back 10% on these values.

The industrial market in Shropshire generally remains protected from any market correction due to the lack of stock and the fact that the last few years have seen very limited new build development. There are many encouraging signs and we believe this will carry on well into 2023.

As a practice, we have now nearly completed the sale of all units and land at Nine Bridges, the former Stadco site in Shrewsbury, with only units 6 and 9a currently available. A number of the units have been acquired on this site for letting purposes by investors and these are, in the main, either let or under offer.

There remains a pent-up demand for industrial and commercial units in Shropshire and we continue to see demand from start-up businesses as Shropshire continues to exhibit its exciting entrepreneurial side.

The retail sector in the county continues to benefit from the fact we have desirable town centres in which people want to shop, and we continue to see genuine strong demand. There will continue to be challenges for the retail sector, as we have seen with the administration of Joules and M & Co in the last month, but we should be encouraged that Joules are retaining their sites in Shrewsbury and Ludlow because these remain strong towns.

There is genuine encouragement in the market town of Whitchurch, which is seeing continued growth as a centre for fine dining. Our practice has recently completed the letting of 16-18 High Street to Docket No.33 (as recognised by the Michelin Guide) as they expand in the town.

We have also seen an interesting and successful regeneration of the former Poundstretcher unit, also on High Street. The property was acquired by a property developer/speculator which has turned it into St Mary’s Arcade – a hugely creative regeneration, demonstrating how commercial buildings can be adapted to meet changing occupier and consumer requirements.

While there may not be significant rental growth in the next few years, there are always opportunities to add value to properties by adopting a creative approach.

Retail in Shropshire will have its challenges, but innovation, regeneration and the inherent character mean that the future is positive. The council has created exciting plans for Shrewsbury town centre that will, if completed, retain its identity as a fantastic shopping experience.

The office market in Shropshire has generally flatlined in the last few years and there is nothing to suggest that the market activity will change. Activity will be led by organic growth of companies or relocation. We do not see any short-term growth on capital and rental values in Shropshire in general. Any speculative development in this sector remains generally supressed by costs of construction.

The leisure and hospitality sector has been particularly under the spotlight due to the concerns over inflationary pressures and the implications of cost of living and consumer spend on leisure activities. There is no doubt this has been a challenging year for this sector but it is still active.

2023 will continue to be a challenging year for Shropshire’s leisure and hospitality sector, particularly as increases in energy costs continue to bite. Shropshire remains a lovely county to visit and has a vibrant tourist industry supplemented by an active use of venues such as The Quarry in Shrewsbury for festivals and social events.

We have sold Henry Tudor House, The Warehouse, and The Coach & Horses in Shrewsbury over the past year, and also village pubs like The Horseshoes in Pontesbury. There has also been the significant letting of The Peach Tree. Shropshire remains full of appeal.

The future is bright, the future is Shropshire. At Halls Commercial, we remain a beacon of hope…

  • James Evans is head of Halls Commercial, based in Shrewsbury