2017 KENT PROPERTY MARKET THE ANNUAL GUIDE TO INVESTMENT & DEVELOPMENT IN KENT CONTENTS 01 Welcome Caxtons’ property market analysis 02 Caxtons' property market outlook 06 Business park performance 08 Office performance 10 Industrial and distribution performance 12 Retail performance 16 Rural performance 20 Residential performance Kent County Council, Medway Council & Kent’s District Council commentary 04 Economic outlook 14 Leisure and tourism performance 24 Economic development 48 Green infrastructure Contributory sponsors’ articles 50 Clague Architects 51 Cripps 53 DHA Planning 54 Handelsbanken 56 Kreston Reeves 57 RICS Locate in Kent commentary 22 Inward investment 58 Strategic developments 61 Contact details 62 Acknowledgements Cover image: CGI of Elwick Place, Ashford. CREDIT: STANHOPE This page: Hammill Brickworks, Woodnesborough, Sandwich. CREDIT: QUINN ESTATES Overall, Kent’s retail market is performing better The full report can be accessed via the website at Welcome than the GB average. Bespoke analysis of Kent’s kentpropertymarket.com.If you would like further high streets by The Local Data Company finds information please go to the Contact page 61. Welcome to the 26th Edition of the Kent Property the county’s average vacancy rate (August) fell Market Report, produced by Kent County Council’s to 8.9% from 9.9% in 2016, compared with only Caxtons Chartered Surveyors, established in Economic Development Division, Caxtons and a marginal improvement for the UK as a whole. 1990, is one of the largest independent property Locate in Kent. This year’s report reviews property This performance is reflected in rental growth; practices in the South East offering a full range of deals and activity throughout 2016-17, major initiatives the county’s average prime high street rent agency, management, professional and surveying to support growth and showcases regeneration growing at its fastest rate since 2008. services across all property sectors. projects completed or on-going across the county. Average Kent house prices grew at a faster rate than Kent County Council’s Economic Development 2017 has seen a steady improvement in market recorded in London over the 12 months to the end Division is responsible for working with public, confidence amongst investors following the of August 2017. This trend, continuing from 2016, private and voluntary sectors to support Brexit vote. The Investment Property Forum (IPF) reflects the county’s robust economic activity, economic growth by encouraging and supporting Consensus Forecasts show upward revisions for combined with expanding commuter demand. businesses; working closely with specific sectors both rental and capital value growth for 2017, An acceleration in value growth across many of to promote growth and finding new ways of driving a UK total return forecast for the year of 6.7% the county’s coastal towns is particularly notable. funding business critical infrastructure and with further upside potential. While Kent has not Bespoke analysis provided by Hometrack for this unlocking key development sites. been immune to economic uncertainty, business report, demonstrates affordable locations such as activity and occupier demand has remained robust Margate and Dartford showing house prices rises Locate in Kent provides a comprehensive, and importantly extended across the county. ahead of west Kent commuter towns. Improved confidential and free business relocation and The next two years will bring greater uncertainty. commuter links and a consolidating sense of place advisory service for all companies looking to Weakening economic prospects will take their toll in many of these east and north Kent towns are relocate to, or expand in Kent and Medway. on occupier demand with IPF forecasts showing attracting incomers as well as investment. a slowing in investor sentiment for 2018 onwards. The producers of the report would also like In terms of inward investment at the end of June to thank the following for their sponsorship During this period Kent’s competitive strengths 2017, there were 284 active projects. Of these, 173 and contributions to this year’s report: will come to the fore. The relative affordability had a potential requirement for property or land Clague Architects, Cripps, DHA Planning, of the county as a place to do business and compared to 183 in June 2016. To June 2017, 52 Handelsbanken, Kreston Reeves and the live, combined with its vital gateway position to companies were successfully assisted by Locate Royal Institution of Chartered Surveyors. Europe, regardless of the Brexit outcome, will in Kent to invest in Kent and Medway, occupying We hope you find the report useful and informative. underpin business demand. This will bolster 52,159m² (561,439ft²) compared to 49,569m² the critical mass of high growth industries now (533,556ft²) in 2016. The report also looks in detail established across Kent. Ensuring a supply of at Kent’s industrial & distribution performance, highly skilled staff will be essential to build on rural property, tourism and the provision of green business demand. Crucially therefore, Kent and infrastructure. Medway will see strong housing supply over the coming decade, underpinned by the major A highlight of the Economic Development section Mark Dance infrastructure investment of recent years. is the diversity of new projects across Kent and Cabinet Member for Economic Development, Medway. The section includes an update on the Kent County Council Business parks have seen robust occupier Kent and Medway Growth and Infrastructure demand for a range of space across Kent. For the Framework developed by Kent County Council, most part rents remain stable, with small uplifts in collaboration with Medway Council, the on some parks, although with stock shortages district authorities and health and utility sectors, in some locations rental pressures are building. to provide a picture of housing and economic Science and medical expertise continues to growth to 2031 and the supporting infrastructure Ron Roser evolve and deepen, building confidence for required. The Transport section highlights the Chairman, Caxtons further development. significant Government investment in schemes and improvements to the rail infrastructure as well as the Many of Kent’s town centre office markets have Lower Thames Crossing. seen a revival in recent years. The average prime rent now stands 11.2% ahead of its pre-financial The Strategic Developments pages feature a crisis peak, having risen by 6.9% over the last 12 comprehensive list of commercial sites and months alone (Caxtons data) but there is variation developments with planning information, useful Paul Wookey amongst the town centres. contact details and location map. Chief Executive, Locate in Kent Ltd Kent Property Market Report 2017 01 Caxtons’ property market analysis Caxtons’ Property 6.7% 25 UK All Property total return forecast for 2017 Basis point fall in Kent prime town centre IFP Survey of Independent Forecasts for office yield over 12 months to the end of Market UK Commercial Property (Aug 2017) H1 2017 Outlook Caxtons Against an unsettled economic and political potential buyers and limited market evidence. As Components of All Property backdrop in the wake of the EU Referendum a result, Caxtons’ prime investment yields remain IPF total return forecast for result, the performance of the UK property market unchanged on 2016. The exception to this is the UK Commercial Property slowed in 2016. Total returns for commercial real prime town centre office yield which reduced Annualised average estate slipped to 3.9% in 2016 from 13.1% in 2015 by 25 basis points during the first half of 2017. over period 2017-2021 (MSCI), driven in large part by weakness in the Rental growth 0.9% prime London market. This movement tells a wider story. There is a clear Income return (implied) 4.9% pattern of improvement in occupier demand Capital return 0.4% 2017 has seen a steady improvement in market in the office sector in towns that have a cogent confidence and expectations for occupier narrative or are starting to articulate a vision. Total return 5.4% demand in the coming months. The Investment Centres with both strong transport links and an Source: Investment Property Forum Survey of Independent Forecasts for UK Commerical Property, August 2017. Forecasts derived from 24 leading Property Forum (IPF) Consensus Forecasts show appealing amenity offer are attracting business fund/investment management houses and consultancies. upward revisions for both rental and capital value interest, although space shortages are emerging growth for 2017, driving an All Property total return particularly where high volumes of office to opportunities for independents to thrive in forecast for the year of 6.7%. This has been at the residential conversions have occurred. These numerous retail centres across Kent. Many expense of performance hopes for the medium factors are having a positive impact on rents; the of these towns have rebounded as a result, term, which have seen downward revisions, a Caxtons’ Kent average prime office rent rose by serving local residents and visitors with their reflection of uncertainty and its impact on the 25% in the last five years and 6.9% in the last 12 own individual offer and character. While the underlying UK economy. Given this, the current months alone. However, over the long term, the Kent prime average retail rent (Cradick) remains wide gap between prime and secondary property lack of suitable space may limit towns’ ability to approximately 25% down on the peak of the yields is expected to persist over the coming year. capture potential occupier demand proffered market, the last two years has seen growth of by increasingly footloose businesses, aided by almost 10%. While Kent has clearly not been immune to technology and changing working practices. economic uncertainty, business activity and Town centre vibrancy has been aided by occupier demand has remained robust and The growing success of many of the county’s growing populations in towns such as Margate, importantly extended across the county towns has also been driven by a transformation Sevenoaks, Rochester and Dartford, supporting over the last 12 months.