A West Midlands commercial property expert is warning that an ‘under-supply’ of building stock is the greatest threat to recovery in the industry.
David Penn, managing director of Shortland Horne Commercial, said there was a shortage of houses, industrial properties and offices and that it would stifle recovery.
He urged the coalition Government to end the ‘state of limbo’ within the planning system in order to get construction moving again to aid economic growth.
At present, he said, with the Regional Spatial Strategy being scrapped, along with AWM, there is little direction for local planning authorities.
“To create conditions for growth, the country and the region need construction in terms of new infrastructure which always acts as a catalyst for growth and in new buildings, both residential and commercial,” said Mr Penn, who is based in Coventry.
“Housing production in the recession has been devastated. In 2007, the annual total of new homes registered was approximately 200,000. At the end of 2009, this figure had dropped to just 88,000 including social housing.
“Unless the construction industry, landowners and finance providers create an unprecedented and immediate phase of new home production, we see returning demand against persistent lack of supply creating real house inflation in the medium and long-term.
“Enquiry levels are coming back to industrial properties and there are many Coventry and Warwickshire companies performing well such as Jaguar, NP AeroSpace and Alumet along with Spyker Cars being built in the city by CPP.
“But there is virtually no new supply of shed-type stock and we believe the only industrial or warehouse building currently under construction in Coventry is the new Royal Mail depot near Toll Bar Island, where further land is being prepared for development.
“Enquiries and activity are encouraging and so the window of opportunity for tenants and buyers to secure available deals may be closing and if take-up continues at current levels seen so far this year the region could have only one year’s stock available at the start of 2011.
“We could therefore be in for a problem and our advice to developers is not to completely discount speculative development of small to medium sized sheds of which there have been none built in 2010.
“In terms of pre-lets, land sales are slow for commercial space in much the same way as for residential, despite the fact that the City has excellent sites.”