Southampton: CBRE 'optimistic' for South Coast property outlook

CBRE has hosted its annual property market insight briefing to investors and local businesses at the Ageas Bowl. This year’s keynote speaker, Kevin McCauley, CBRE UK’s director of research, gave a broad overview of the possible impact Brexit may have, the current economic outlook and the condition of the property market across southern England.

With Brext hanging in the balance, the UK’s economic indicators are still mixed with GDP for the three months to August up by 0.3%, driven predominantly by growth in the services sector. By contrast the three months to July were flat and Q2 saw an overall contraction of -0.2%. Globally, the GDP outlook is slowing. Across the world, it is forecast to drop from 2.6% to 2.5% in 2020 and the UK is also forecast to decline to 1.0% from 1.2%.

For cities where CBRE has a presence, Manchester is the best performer overall in GDP terms, forecast to deliver growth of 2.2% by 2021 after a dip next year. Across the South East, current predictions show GDP growth to be only 1.1% in 2019, but this should recover to 2.1% by 2021.

Looking at the office market; the 12 months to September saw regional cities take up reach 6.31m sq ft, compared to a 10-year average of 6.52m sq ft, with the South East seeing a take-up of 3.25m sq ft against a 10-year average of 2.90m sq ft.

In terms of Southampton, lack of availability continues to impact significant deals in the city centre, but when combined with the immediate out-of-town deals, this year has seen a take up shy of 250,000 sq ft, similar to that for 2018.

Availability in the city is split relatively evenly with 73,765 sq ft of Grade A and 70,000 sq ft of secondary space, marginally up on 2018.

Commenting on the event, Kevin McCauley said: “Following a record year in 2018, occupiers in the logistics sector are understandably more cautious when it comes to making decisions, but there is no doubt that demand remains strong, even after a quieter start to the year. This has been particularly the case for the automotive industry which accounted for just 2.0% of transactions in 2018 compared to 18.0% in the year to date.

“In terms of investment, we have witnessed a slowing in deal terms as investors await the Brexit outcome, although expect volumes, especially for good quality assets to rise once Brexit uncertainty lifts”.

CBRE regional managing director James Brounger added: “This year’s market insight briefing comes at an extraordinary time from a political perspective. As a city, Southampton is seen as one of the standout performers in the South with its strong technology, real estate, education and marine business sectors. It is inevitable that manufacturing will see the most disruption in the wake of Brexit, but we are still optimistic for the outlook for the city and South Coast in general.”