Designated as a New Town in 1968 and with strong road and rail connections, Peterborough’s economy grew in the 1970s and 1990s. It was initially focused on manufacturing, in particular engineering, although in recent years this sector has been in a state of steady decline.

However, the industrial market has clearly benefitted from the continued shift towards online retail as many retailers have established large distribution centres in the city, such as Amazon, Debenhams and IKEA.

Similarly, whilst Peterborough benefitted from the relocation of financial services firms from London during the late 1980s, the office sector has since weakened considerably and the major occupiers in the city are public sector bodies. Whilst many private sector companies including Budget Insurance, Thomas Cook and Bauer Media retain a large presence in the area, the market is now dominated by smaller and more local companies.

As a consequence, the opportunities within the business space sector are remarkably similar, although for different reasons.

Within the industrial sector vacancy rates are at a historic low of 2.2% which is all the more remarkable given the amount of large scale warehousing in the area. Roxhill have been extremely successful at Peterborough Gateway disposing of over 2.6m sq ft in just three years. With just one plot remaining and no other sites currently actively being marketed the opportunity exists for landlords of second hand units to take advantage and undertake refurbishments to bring poorer quality units up to standard as the rent spread between grade A and grade B units continues to narrow.

At the smaller end of the industrial sector, 12,600 sq ft is under construction at Axis Park in small units. Whilst welcome, this is only a tenth of a year’s worth of supply based upon an annual average take-up of 121,000 sq ft for units under 5,000 sq ft.

Within the office sector vacancy rates have actually increased and now stand at 4.4% due to a combination of two years of falling take-up but also the fact that 600,000 sq ft of office stock has been lost through permitted development to residential.

While prime office rents have fallen from their 1992 peak of £17 per sq ft the loss of stock is creating an upward pressure and rents now stand at £13 per sq ft. Whilst this still makes new office development unviable aside from pre-lets there is the short term opportunity to deliver excellent refurbished buildings and drive continued rental growth.

A good example of this is the recently refurbished Lynchwood Park where units between 3,000 and 50,000 sq ft are available and rents are quoting at £17 per sq ft.

Without new development on the industrial side and refurbishment on the office side the recent upward pressure on rental growth may start to dissipate.