With such a lack of new space in some regions, should secondary and tertiary stock be redeveloped to help meet demand. Paul Aylott, Partner at Glenny and Head of the Lease Advisory division, says owners should look closely at the secondary and tertiary stock in their portfolio and weigh up the options ... "With such a lack of new stock in some regions, especially in London and the South East, it might be tempting to consider redeveloping secondary and tertiary stock to help meet demand. However, given the current situation vacancy rates at record lows, secondary/tertiary stock achieving premium levels and 100% occupancy in some areas this solution could be considered economically unviable on initial appraisal. "Nevertheless, strategically it will still be important to consider redevelopments on a case-by-case basis as secondary or tertiary stock that is delivering good rental yields and is achieving 100% occupancy could still be worth investing in. "Upgrading an asset to make it work harder and become better equipped to current use requirements will not only create a more valuable building, but will attract a more valuable tenant and result in a more valuable investment also. "The message here is: do not assume 100% occupancy equates to 100% return on investment. "If there are individual opportunities to intensify land use and increase the site footprint, these should be explored as the long term benefits will undoubtedly outweigh the short term disadvantages of temporarily withdrawing sought-after secondary and tertiary stock from the market." [Paul's comments on secondary and tertiary sheds also appear in the 26th May issue of Property Week and on Propertyweek.com]
Secondary and tertiary sheds: will redevelopment help meet demand?
By Robert McAllister