UK Commercial Property Market Still Fragile – Sergo

Last Thursday, on November 5th, Sergo – one of the leading EU landlords in the industrial sphere, published a report, which stated that enquiries for rental property declined in the 3rd quarter despite the positive signs that emerged earlier.
In the opinion of Mr. Ian Coull, chief executive at Sergo, the market of rental property is still fragile even though the sector was expected to revive soon, as the increase in enquiries during the summer months seemed to signal recovery. Mr. Coull, however, admitted that Sergo management perfectly understands that will still take some time and that the level of enquiries and rents will fluctuate in the near future due to uncertain economic conditions in the UK.
As for its own business, Sergo, the portfolio of which is 65% UK-concentrated, said that its medium-term goal is to reduce the vacancy rate of Brixton properties. Let us remind that Brixton was taken over by Sergo earlier this year, giving the company a combined £5.5 billion worth of portfolio.
At the moment, the vacancy rate of Sergo’s properties, excluding Brixton portfolio, stands at 10.9%, up from 11.3% earlier. Including Brixton portfolio, Sergo’s vacancy rate is significantly higher – 14%.
That is the reason why Sergo plans to take an extremely prudent approach to business management. In the opinion of Mr. Mike Prew, property analyst, the sector of commercial property is not shaped by companies’ actions, but rather by government stimulus.
According to the Investment Property Databank information, revealed last month, UK commercial property was one of the few sectors that saw a significant increase in property values, after they experienced a 44% downfall from their peak level.
Mr. Coull said Sergo is encouraged to see such a prompt recovery of UK commercial property values and to understand that the rest of Continental Europe is unlikely to experience such a sharp fall in commercial property values, as the UK did earlier.