The last 6 months have been the busiest period in the commercial property market I can remember since late 2007.
There is plenty of evidence that the employment market in Milton Keynes will receive a boost from this increased activity as a result of relocating organisations and growth of existing businesses.
So it is no surprise that once again the Centre For Cities research group has singled Milton Keynes out as one of the places likely to recover quickly from recession.
The latest study for 2011 says Milton Keynes, along with Reading, Leeds and Bristol, is regarded as being better insulated from the effects of government spending cuts than other cities because its private sector has the potential to create new jobs.
There’s no doubt that MKs location continues to work its magic and attract strategic relocations, including ITSO the research organisation which has moved to Rooksley from Birmingham and a premium tea company relocating from premises in London and Gloucestershire to Kingston.
In addition, Waitrose have added to their existing Brinklow operation and 40,000 sq ft at Milton Point in Wymbush has been let to Oxfam as a regional distribution centre.
There are also several recent examples of companies already in MK taking new premises to accommodate growth.
The UK head office of Swedish flooring giant Bona has moved from Knowlhill to larger multi-function premises including offices, warehousing and state-of-the-art training facilities at Integra:MK in Linford Wood.
The Silverbug IT consultancy business started in Crownhill less than a decade ago and have recently bought a detached 16,000 sq-ft office/warehouse and data centre building in Sunrise Parkway, Linford Wood. Silverbug provide IT services to companies across the UK and plan to grow the business to up to 120 employees.
Another expanding locally-based company is Motivcom plc who have taken a lease on 30,000 sq ft at Avalon House on Linford Wood West.
Other lettings show that grass roots growth is also steady and many smaller local businesses have taken advantage of competitive rents to expand.
Oak House and Chancerygate Business Centre, both had no new lettings in 2009, but achieved five each in the second half of last year to small-medium sized enterprises occupying 500-3,000 sq ft.
However, can we really expect the private sector to create new jobs quickly enough to make good public sector job losses when we hear news, as we did at the end of January, that Milton Keynes Hospital is considering cutting 280 jobs? And they will not be the only local body making cuts.
In addition, the macro-economy faces pressure from the soaring price of oil and rising energy costs.
Last month UK manufacturers paid 13.4 per cent more for materials and fuel than the year before. Inflation and taxation is at a five-year high at a time when the private sector is expected to generate economic growth and create jobs.
In the commercial property sector itself, perhaps the real sleeping dragon is negative equity. Respected property industry commentator Nick Leslau has warned that commercial property in the UK has a £194 billion imbalance in debt to equity. In the short term at least, many property investors would be unable to repay their borrowings if required to do so.
Maybe this will create opportunity in MK; the prospect of maximising return here has led landlords to invest in the refurbishment of empty premises.
Proactive landlords are the ones seeing results. The opportunity is that businesses have been offered not just good deals at realistic rental values, but great premises as well. And it works both ways: at Integra:MK we achieved headline rents of £7.75 per sq ft pa – equal to the best rent ever achieved in Milton Keynes for light industrial/warehouse buildings over 10,000 sq ft.
There is a lack of premium quality new space in MK as highlighted in last month’s article by Charles MacDonald.
However, Douglas Duff has several excellent examples of first class refurbished offices now available where landlords have completed very extensive refurbishment programmes including new air-conditioning systems, new common areas and new internal finishes at Phoenix House and Bank House in CMK along with Linford Wood Business Centre in Linford Wood and coming soon, Exchange House and Elder House in CMK.
Private sector confidence in MK is at a three-year high.
Let’s hope that it continues in the face of public sector cuts, increased taxation and spiralling running costs.