‘Island has a shortage of grade A office space’
THE construction of a new 61,000sq. ft office building at Admiral Park requires a ‘significant pre-let’ to commence, according to a review of Guernsey’s property market.
Property agent Savills also said that there was now a shortage of grade A office space on the island, with no new office construction since 2011.
‘This means that options for existing and new occupiers are extremely limited, but has worked in landlords’ favour, sustaining rents at £43 per sq. ft,’ said the company in recently published research into the Channel Islands property market.
‘A shortage of supply will continue to characterise the Guernsey office market. Planning permission is in place for a 61,000sq. ft office building at Admiral Park, but it requires a significant pre-let to commence.
‘Longer term, the island’s government is aware of the lack of developable space, and beginning to explore opportunities to address this.’
A ‘deepening’ demand for office investment in the Channel Islands was also discussed in the report, ‘with major investment sales attracting bidders from the Middle East and Asia for the first time’.
‘Market liquidity is improving as new investors look to the islands, attracted by comparatively high returns, new investment-grade stock, long leases and good covenant strengths. Institutional investors and private funds are present, as well as HNWI investors.’
The research pointed to three recent major property deals as examples of interest in Jersey and Guernsey’s office markets internationally thanks to the islands’ status as established international centres of business and finance.
‘In November 2018, Jersey’s Gaspé House was sold by Savills on behalf of Dandara to Seaton Place Ltd for £90m., the largest ever single commercial property transaction in the Channel Islands, at a net initial yield of 6.16%. The sale of the 164,000sq. ft building attracted interest from a wide range of institutional and HNWI investors from around the world.
‘The same month, the sale of IFC 1 [in Jersey] for £42.7m. set a sub-6% yield, underlining the strength of the commercial property investment market on the island.
‘In April 2019, Guernsey’s Dorey Court and Martello Court, totalling 89,000sq. ft, were sold, again by Savills, to a private overseas buyer in April 2019 for £60.65m., at a net initial yield of 6.35%.’
