Demand increases value of vacant office space – commercial mortgages

17 November 2006

Demand for office space is driving up the value of properties for investors in the midlands, including those with commercial mortgages, according to an expert.

A recent study by GVA Grimley revealed that strong yields and rental growth had established commercial property as a significant investment opportunity, while demand has led to an increase in the value of vacant properties.

Commenting on the market, Carl Potter, Birmingham offices partner and national head of business parks for GVA Grimley, said that value growth within the market has traditionally been based on occupier demand, but recent trends suggest otherwise, the Birmingham Post reports.

"More recently, however, the phenomenal demand for commercial property has shifted the emphasis towards owners, who are benefiting from rising capital values without occupier demand running alongside," he commented.

The value of unoccupied properties in a number of areas has increased as the level of demand from tenants is anticipated to grow as well.

A recent report by the Investment Property Databank found that total capital growth of the office sector in the UK during October was one per cent, while rental growth reached 0.5 per cent.