THE number of commercial property refurbishments in the UK rose at the fastest rate for almost six years last month, which could be a sign that developers are still finding it hard to raise cash for new projects.
These findings are contained in a report published today by Savills Project Consultancy, which indicates that commercial development activity in the UK enjoyed “solid” expansion in March.
However, it suggests that the new-build market could be held back by a lack of finance.
The Total Commercial Development Activity Index – a net balance monitoring the overall performance of the UK commercial property sector – fell from +10.9 per cent to +10.6 per cent in March.
Private commercial development rose at the fastest pace in four months, although the public sector suffered a decrease in activity.
At -1.3 per cent, the net balance for public sector commercial activity fell from +1.4 per cent in February, and indicated a slight contraction.
Almost 29 per cent of monitored commercial developers said there was higher activity in the private sector, while 11 per cent recorded a fall.
Although commercial developers in the UK were positive about the outlook for the next three months, they were, on average, less optimistic than they had been in February.
Many of the commercial developers who were feeling optimistic, said they had been signing new contracts.
The study found that growth in refurbishment activity was sharp, and accelerated at its fastest pace since May 2007.
Office fit-out work also expanded at its fastest rate in 35 months, according to the study.
The pace of growth in industrial and warehouse activity accelerated at its fastest pace in almost six years.
Michael Pillow, the head of building consultancy at Savills, said: “The news that refurbishment activity rose at its fastest rate since May 2007 this month, is both a reflection of the difficulties that developers are having raising finance for new-build projects, as well as an indication of the rising interest among tenants for the most austerity-driven property solutions.”
There have been a number of high profile refurbishment schemes carried out in Yorkshire over the last year.
Last month, four speculatively-built warehouse units were created with a £1m investment at the Northminster Business Park, in York.
The new back-to-back warehouses have been developed by the business park’s owner, Northminster. Northminster has refurbished a 12,000 sq ft warehouse at the heart of the business park using the original steel frame.
A development surveyor at Leeds-based property and investment company Rushbond, Richard Bakker, said: “Another element of this is that it is not just about refurbishment but about the re-use of distinctive and often historic buildings where it is not desirable, or even possible, to pull them down.
“The current economic climate also demands value and, where possible it often makes a lot more sense to refurbish premises than to do away with them. It is no longer an automatic assumption of demolition and start again, especially as there are so many good quality buildings. New development will gather pace as the economy improves and bank lending grows but, in the meantime, an era of refurbishment and re-use is no bad thing.”