News

The first predictions for 2025, include signals for the return of commercial property investment transactions in the county. Something that we have not seen a lot of, as owner occupiers have dominated the freehold commercial market in both the industrial and office sectors since Covid.

There still remains a massive disparity between the supply and availability of freehold industrial and office property in the county (and there seems no sign of this abating in 2025) however, we have seen a slight cooling off from many local businesses in the final quarter of 2024 who, saddled with rising costs (principally the rising costs of NI contributions), have already put the acquisition of new premises on hold which we think will have a cooling effect on prices over the next 12 months.

Once freehold prices return to normal levels and rents remain strong then investors will return, and this is healthy for the commercial market as it frees up properties in the county for expanding local companies to move into to.

Predictions for 2025 on the rental side, is that we anticipate that modern high-quality offices and industrial units will remain attractive to tenants keen to take advantage of the counties’ motorway links, proximity to Birmingham, and the central position in the UK.

We think that older office premises in the county may struggle over the next 12 months to attract good quality tenants with limited rental growth expected in this sector.

Older industrial units will continue to attract tenants, but landlords need to be mindful of the Minimum Energy Efficiency Standards (MEES) that are now required in all Commercial buildings that are let out to tenants and in particular the requirement that all properties must have a C rating by April 2027 and a B rating by April 2030.

Already in 2024, we have started to see that MEES have crept into some rent review and lease renewal negotiations. Most tenants accept that the rent must go up, but they want assurance that the landlord is addressing the MEES regulations so that their occupational costs are kept to a minimum.

Finally, we predict that more companies looking to buy and rent premises in the county will finally realise that they need professional property help. Each year tracking the data via our Worcestershire Commercial Property Market Report we can see that only about 26% of purchasers and 29% of tenants renting commercial space take advice from a Chartered Surveyor. Most sales and lettings need solicitors to act both sides so it bemuses us as to why a purchaser or a tenant would even attempt to buy a building or sign a lease without professional property advice.

Every week we take calls from frustrated business owners who want to expand their business, but they cannot find the right premises and when they do the building is already let or sold. Tenants do not realise the savings that can be made if they seek early advice from a Chartered Surveyor who will have contacts in the area, will know comparable rental and sales deals, can negotiate lease terms, advise on business rates and service charge and above all get the business looking to acquire premises to the front of the queue.

In summary, predictions for 2025 include a year of change with a cooling off on prices for freehold and office and industrial property, a slowing down of the prolific rise in rent since covid, particularly in the industrial and warehouse markets. Whist there are signs of new commercial development in the county the speed at which this new space is built will not affect the current supply demand imbalance and companies need to develop a robust acquisition strategy using experienced property professionals who know the market well, rather than thinking that they will miraculously find their next commercial premises.

For further information on how we can help you, please visit Commercial Property Experts | GJS Dillon or call 01905 676169.