Landlords are being urged to favour refurbishment over new build as financial constraints continue to freeze the speculative office development market.The warning, from property consultant GVA Grimley, is contained in its office market bulletin, titled Refurbishment vs Redevelopment.
The report says that due to the continuing lack of finance and concerns about the occupier outlook, speculative development has slowed to almost a standstill.In addition, it also says that that time-lags associated with the development cycle mean that, as the occupier market returns, there is likely to be a shortage of Grade-A supply in some markets.
As developers and landlords seek a more feasible approach to deliver office stock, conditions have pushed the need to consider refurbishment further up the agenda.Ian Parker, a Director within National Offices at GVA Grimley comments: “With development finance expected to be in short supply for an extended period, refurbishment needs to be a far greater consideration for landlords.
“Lease terms are becoming shorter and more flexible as landlords seek short-term assurances and occupiers dare not commit to long-term leases while the outlook remains uncertain. This means the tenant turnover rate will increase significantly, raising the need to refurbish.
Source: propertytalk Live!