What’s driving deals in Kent

When it comes to matters of ESG, the UK is a tale of two very different markets: there are big institutional landlords whose occupiers will have customers insistent on carbon neutrality across the supply chain, and then there is everyone else. Ned Gleave very much represents the latter. Gleave is an associate at agency Sibley Pares, which has done more deals in Kent than anyone else on the Radius On-Demand Rankings. His bread and butter is the industrial sector, which thrives across the county thanks to its connectivity. His views on where the market is, from a sustainability point of view, are instructive to anyone following the ESG debate. “I hate to say it. I don’t think that ESG, sustainability, has really fed its way down to the levels that I work in,” he says. Gleave believes tenants see value in the reduced running costs that sustainability brings about, but he thinks priorities lie elsewhere. “Solar panels and EV charging points, from my understanding, are almost becoming mandatory with planning now and I think those are nice little sweeteners for tenants,” he says.  “But sweeteners, not necessities.” Park it If not ESG, what are tenants looking for? “High eaves is one that will drive demand, being able to have full cover mezzanine floors with four or five meters still clear below,” says Gleave. “But interestingly, best-in-class buildings I think are secondary at the moment to parking and outside space. “That’s what sets properties apart. A new-build scheme can be built to the best specification but, unfortunately, they all come with the same fairly small forecourt: two or three car parking spaces, maybe a little bit of yard, but it’s being able to offer additional space above the standard which I would say is driving more demand.” For Gleave, the reality is that car parking is a far bigger driver of uptake than anything, as a recent example proves. “We’ve been acting on a new scheme, Entralon Gate in Ashford, which probably is the new best-in-Ashford, five units over 55,000 sq ft,” he says. The first unit was let to Speedy Hire earlier in the year, a 15,000 sq ft detached unit on a secure yard. “We would have let that five, maybe even 10 times over before we were able to agree terms on the remaining units, which were not detached,” Gleave says. “They shared a one-way system, they had minimal parking areas. It’s that drive for outside space that sets these places apart.” Gleave says this thirst for parking is by no means confined to the industrial market. “I would say that translates to the office market as well. We are doing a few more office deals than we were previously but, funnily enough, I was talking to a colleague yesterday and I said, ‘It is almost a car parking market’. “The office market at the moment, especially in the areas we work in – Canterbury, Ashford, Maidstone – if you can offer a grade-A office building for 5,000 sq ft but you’ve got 10 parking spaces, that’s not going to work. The same tenant might consider half the space for double the car parking.” Future shock Advocates of ESG will point out that regardless of the market’s addiction to cars, regulatory changes to EPC standards are almost certainly coming down the line that will force landlords to take environmental considerations more seriously. Is this something they fear? “We try and make them aware of it but, no, I don’t think they do,” says Gleave. “And I think an awful lot of landlords might have quite a shock if these projections that are coming forward do actually happen.” Gleave believes the task ahead in decarbonising existing stock is so huge that owners are assuming there will be get-out clauses. “I think there is a little bit of arrogance in the market at the moment, not just with landlords but with agents and surveyors as well. To ensure that every building in Canterbury is up to a B rating by 2030, or even a C rating by 2027 – if they truly were to stamp down on this, half the buildings are listed, so in half the buildings it is unachievable without significant work that would impact the integral listing of the building. “Are all those buildings suddenly going to become non-compliant? No. And I think for most people they understand that there will be mitigation that comes with it, as there has been previously, but because we don’t know what those mitigations might be I think people are watching this space.” While one end of the market is attempting to self-regulate its way to decarbonisation, it is clear that the opposite end will require external pressure to get there. In part this will come from companies that provide financial services to landlords and occupiers, but government has a job on its hands when it comes to EPC review to ensure a balance is met between changing attitudes and leaving swathes of commercial stock empty. The sooner it gets there, the better. See analytics data for Kent >>