Hammerson says office space values have reached their low point
According to Hammerson Plc. which owns the stakes of two of the UK’s primary commercial buildings, Bishops Square Complex and Birmingham’s Bull Ring Mall, the past two year commercial-property slump in the UK may be nearing its bottom.
According to John Richards, the Chief Executive Officer, with the decline of rents across the area of property values have stopped declining. Plus, the capitalization rates for the new available renovated stores, warehouse, and offices are expected to peak within the next month. These rates are more commonly known as the rental income that a building produces versus its actual value.
Richards declared during the interview that the company expects to see values begin to stabilize and that default and vacancies will become much rarer from this point forward. This is good news for all businesses and new developments, as there remains a demand for office space in prime locations; specialist design and contracting firms such as Claremont Group Interiors, report an increase in enquiries from both the corporate office and commercial interior markets.
Since the building market peaked in June 2007, UK commercial property values has fallen by a drastic 44% which was blamed widely on the credit crisis, the rise in unemployment, and the economic recession in general. The decline for the month of May was reported to be 1.6% which is the smallest decline in over a year.
Hammerson was the first of the top four property companies to be forced into a rights offering in order to avoid breaking their bank loan after their assets value went from 6.5 billion pounds down to 1.05 billion pounds in December. The company stakeholders placed 584 million pounds of rights up on the market in March.
