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Business

Commercial property demand falls but investment enquiries for industrial space up

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OVERALL occupier demand for commercial property in Wales declines at all-sector level
Industrial space continues to outperform both retail and office sectors
Surveyors in Wales more optimistic on the 12-month outlook for capital values
Occupier demand for commercial property in Wales fell in Q2 after rising through the first quarter of the year according to the latest Royal Institution of Chartered Surveyors (RICS) Commercial Property Monitor as the industrial sector continues to outperform both office and retail.

A net balance of -17% of surveyors in Wales reported that occupier demand fell at all-sector level through the second quarter of the year. Looking at the subsectors, demand for both office and retail space was reported to have declined, with net balances of -25% and -27% respectively. Occupier demand for industrial space was noted to have fallen flat through Q2.

At all-sector level, a net balance of -19% of surveyors in Wales reported a fall in investment enquiries. Investment enquiries were up in the industrial sector, with a net balance of 6% of respondents noting an increase. A net balance of -36% of survey respondents noted a fall in demand from investors, and -27% reported a fall for office space.

Capital values are expected to fall in the short term, with a net balance of -13% anticipating a decline over the next three months at all sector level, down from 7% in Q1. Looking at the subsectors, industrial space is the only subsector in which capital values are expected to rise with a net balance of 27% anticipating an increase. A net balance of -23% of Welsh respondents expect a fall in retail space and -43% in office space.

On the 12-month horizon, surveyors in Wales appear more upbeat with a net balance of 13% of respondents anticipating a rise in capital value expectations over the next year at all-sector level. Surveyors in Wales anticipate that capital values for both office and industrial space will rise over the next year, 8% and 47% respectively whilst retail space is expected to fall (a net balance of -17%).

Chris Sutton of Sutton Consulting Ltd in Cardiff commented: “The industrial market remains strong, particularly along the M4 corridor with quoting rents of £9.00+psf on St Modwen Park, Newport for Grade A large units. On the opposite side of Newport, KLA has developed a 220,000 sq ft production / R&D facility at Imperial Park. Other bright spots are the data and energy sectors. In Cardiff, Grade A offices remain in demand as tenants readjust their occupational footprints to increased tech and new working practices.”

Haydn Thomas of Hutchings &| Thomas property consultants, in Newport added: “The South Wales commercial property market remains fairly static, with some sectors such as industrial space and roadside drive thru doing well. Lack of supply of front door owner occupier office space remains an issue especially from 3-5,000 sq ft. Demand for office space with larger floor plates remains low; Cardiff City may be bucking this trend slightly. Retails in city centres remains a problem, however, some smaller market towns seem to be doing well in terms of occupancy.”

Commenting on the UK picture, RICS Senior Economist, Tarrant Parsons, says: “Overall activity remains relatively subdued across the UK commercial property market, with conditions seen as generally flat in Q2. That said, respondents now feel the market is moving towards the early stages of an upturn following a challenging couple of years.

“The near-term path for monetary policy will be key to the outlook for CRE investment going forward, although hopes of an immediate easing in lending rates may be optimistic given still sticky services inflation (even if the headline rate has returned to target). Away from the cyclical picture, a strong structural trend that continues is the outperformance of prime office markets compared their struggling secondary counterparts. In particular, prime offices across London are seen delivering solid capital value and rental income returns over the coming twelve months.”

Business

Salon plans for Haverfordwest car valet site approved

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RETROSPECTIVE plans to change a Pembrokeshire car sales/valet area to include a barber shop and tanning salon have been given the go-ahead.

In an application to Pembrokeshire County Council, Zizo Barbers & Affordable Cars, of Cambrian Place, Haverfordwest sought permission for the change of use of previously granted valet and car sales area, the works completed in 2024.

A supporting statement through agent Hayston Developments & Planning Ltd said the former commercial garage business has been operating in several guises from the premises for many years and has included petrol sales, motor servicing and repairs, MoTs, vehicle valeting, car sales and customer parking.

This followed on from a 2011 permission for the partial demolition of the original commercial garage, with a later approval for the site refurbishment to provide a workshop, valeting and offices for the existing car sales.

A supporting statement said: “The proposed update to a change of use involves the replacement of a car valeting service, which took place under a covered area at the rear of the site by a wash and valet operation – and restricting this service to those cars being sold at the Cambrian Place site. The use of a former office / store as a barber shop.

“The use of the former customer waiting area as a tanning salon including a new moveable timber shed for use as a meet and greet facility and as a car sales office. Provision of a communal parking area. Whilst retaining the principal use of the site for the sale of used cars.

“It is therefore suggested that the proposal will reduce both the elements of noise and the generation of dust whilst improving air quality as substantially fewer cars being power washed and valeted as well as the visual impact of these activities in this very public location – and with adjacent residential properties.”

Haverfordwest Town Council had objected to the scheme on highway safety grounds, but an officer report recommending approval said: “Highways colleagues have advised that the mixed use at the site is not likely to generate a significant number of trips that would lead to congestion and/or road safety issues due to the hours of operation are suggestive of visitors in the non-peak hours over the course of the day.

“In addition, highways colleagues have confirmed recorded accident history is negligible at the site, with one accident in 2023 at the nearby junction as a result of a rear shunt.”

It also said that, as the site lies adjacent to the A40(T) Welsh Government as a highway authority were consulted on the application, but has not not issued a direction in respect of this application.

One letter of objection had also raised issues of traffic and highway safety, chemical and detergent waste from the site and occasional activity after 5pm.

The report said the cessation of the valeting/washing use will reduce water usage at the site and any activity outside normal hours was an enforcement matter.

The application was conditionally approved by officers.

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Business

Community council objections to Tenby Lidl store scheme

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PLANS for a new store on the edge of Tenby by retail giant Lidl, which has seen objections from the local community council, are likely to be heard next year.

In an application recently lodged with Pembrokeshire County Council back in October, Lidl GB Ltd, through agent CarneySweeney, seeks permission for a new 1,969sqm store on land at Park House Court, Narberth Road, New Hedges/Tenby, to the north of the Park Court Nursing Home.

The proposals for the latest specification Lidl store, which includes 103 parking spaces, would create 40 jobs, the applicants say.

The application follows draft proposals submitted in 2024 and public consultations on the scheme, with a leaflet drop delivered to 8,605 local properties; an information website, with online feedback form; and a public exhibition, held last December at the De Valence Pavillion in Tenby, with a follow-up community event held at New Hedges Village Hall, close to the site, publicised through an additional postcard issued to 2,060 properties.

Some 1,365 responses have been received, with 89 per cent of respondents expressing support for the proposals, the applicants say.

A supporting statement says: “Lidl is now exceptionally well established in the UK with the Company operating c.980 stores from sites and premises both within and outside town centres. Its market share continues to increase substantially, and the company is expanding its store network considerably. The UK operational model is based firmly on the success of Lidl’s operations abroad with more than 10,800 stores trading across Europe.

It adds: “The granting of planning permission for the erection of a new Lidl food store would increase the retail offer and boost the local economy.  The new Lidl food store would create up to 40 employment opportunities for people of all ages and backgrounds, providing opportunities for training and career development.  This in turn will create an upward spiral of economic benefits.”

Local community council St Mary Out Liberty Community Council has formally objected to the scheme, saying that, while it supports the scheme for a Lidl store in principle, recognising “the economic benefits a new retail store could bring,” it says the proposed location “is unsuitable, conflicts with planning policy, and cannot be supported in its current form”.

Its objections add: “The A478 is heavily congested in peak tourist months. A supermarket would worsen congestion, increase turning movements, and heighten risks to pedestrians, cyclists, and emergency access.”

It also raises concerns on the potential impact through “noise, lighting, traffic disturbance, and loss of quiet amenity” on a neighbouring residential care home.

An initial assessment by Pembrokeshire County Council, highlighted concerns about the visual impact, with the authority’s landscape officer commenting that the store would introduce “an intense urban function into an otherwise rural context”.

The report added: “It is not considered to be compatible with the character of the site and the area within which it is located; and furthermore, will lead to a harmful visual impact on the setting of the National Park.”

The application will be considered by county planners at a later date.

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Business

Senedd approves £116m transitional relief for business rates

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BUSINESSES facing sharp hikes in tax bills after the 2026 revaluation will see increases phased in over two years after the Senedd backed a new transitional relief scheme.

Senedd Members unanimously approved regulations to help businesses which face significant rises in non-domestic rates bills after a revaluation taking effect in April 2026.

The Welsh Government estimates the transitional relief will support 25,000 ratepayers at a cost of £77m in 2026/27 and £39m in 2027/28. The partial relief covers 67% of the increase in the first year and 34% in the second.

Mark Drakeford, Wales’ finance secretary, stressed the £116m scheme comes on top of permanent rate reliefs which are currently worth £250m a year. He said ratepayers for two-thirds of properties will pay no bill at all or receive some level of relief.

The former First Minister told the Senedd: “In providing this transitional relief scheme, we are closely replicating the scheme of relief we provided following the 2023 revaluation – supporting all areas of the tax base in a consistent and straightforward manner.”

The Conservatives’ Sam Rowlands expressed his party’s support for the transitional relief scheme which will help ratepayers facing sharp increases after the 2026 revaluation.

Conservative MS Sam Rowlands
Conservative MS Sam Rowlands

He said: “We are grateful that the Welsh Government has at least brought forward a scheme that will soften the immediate impact for thousands of Welsh businesses.

“We also understand that if these regulations are not approved or supported… this relief scheme will not be in existence. Many businesses across Wales would face steep increases with no protection at all and that is certainly not an outcome we would want.”

But the shadow finance secretary warned businesses up and down Wales are worried about the increase in rates that they are liable to pay.

Advocating scrapping rates for all small businesses in Wales, Mr Rowlands said: “We’ve heard first-hand from many of those in the hospitality and leisure sector, some of whom are facing increases of over 100% in the tax rates they are expected to pay.”

Responding as the Senedd signed off on the scheme on December 16, Prof Drakeford said the Welsh Government had to wait for the UK budget to know if funding was available. As a result of the time constraints, the regulations were not subject to formal consultation.

Prof Drakeford agreed with Mr Rowlands that voting against the regulations would not improve support, only eliminate the transitional relief package before the Senedd.

Finance secretary Mark Drakeford
Finance secretary Mark Drakeford

Earlier in Tuesday’s Senedd proceedings, former Tory group leader Paul Davies warned Welsh businesses have already been hit with some of the highest business rates in the UK.

He said: “The latest business rates revaluation has meant that some businesses are now facing rises of several hundred per cent compared with previous assessments…

“Whilst I appreciate that a transitional relief scheme will help some businesses manage these changes, the reality is that for many businesses it’s not enough and some businesses will be forced into a position where they will have to close.”

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