When the industry talks about green shoots it can sometimes feel like an attempt to manifest recovery, but Shepherd Commercial director Kaine Arkinson has the data to back up his claims.
Arkinson, an all-rounder who operates across the West Midlands region, got 14 deals over the line in May, making him EG’s Dealmaker of the Month. For the 23-year-old, the market has turned a corner.
“We’ve probably had 18 months where a lot of people have been cautious, despite having liquidity and the cash on the sides to deploy it, and I think they’re now ready to release the handbrake a bit,” he says.
For Arkinson, the change came in the first two weeks of May, when he sensed that economic pressures were beginning to ease.
“I think it’s just the overall sense of stability, really,” he says. “Over the past three or four months a lot has been going on, and it seems like it’s cooled off a little bit. And I think coming into the summer and the second half of the year a lot of people are ready to deploy their cash and take that venture.”
Industrial sweet spot
Shepherd Commercial was founded almost 20 years ago in Solihull and is still based there, although it has also opened an office in Brindley Place in central Birmingham. With the M5, M6, M42 and M1 on its doorstep, it is no surprise that industrial remains the core of its work.
“The industrial sweet spot tends to be between 2,500 and 10,000 sq ft,” Arkinson says. “We have a huge client list of people with that requirement. As you go above the 10,000 sq ft mark it reduces drastically in terms of the people with that requirement.
“But I wouldn’t want to discount 1,000 sq ft units. I know right now if there were 20 built across the road here in Solihull we would let them all within a couple of weeks. That level of industrial is very well sought after.”
Which begs the question: why are they not being built? For Arkinson, it is an issue that agents up and down the country will know all too well.
“Planning needs a reform, one way or another,” he says. “There’s a lot of red tape and it restricts a lot of development and a lot of growth opportunities, particularly here in Solihull. Having grown up here that’s what I’ve noticed – but even out towards Tyseley and the inner city of Birmingham, planning is such a difficult thing.”
But Arkinson remains optimistic and believes there is an important difference between where we are now and where previous downturns have left us, which is the amount of cash still out there in the market.
“I think there’s an awful lot of people with dry powder on the sidelines,” he says. “That is emphasised even more by the fact that freehold supply, particularly industrial, is probably at record lows. And that’s because of the rental values that people are achieving on industrial. So they’re brilliant investments, brilliant as part of a portfolio, and no one really wants to get rid of them. And the people are out there waiting.”
Arkinson believes offices are also in good shape and landlords are increasingly taking the opportunity to upgrade stock from grade-B as, he believes, occupiers are increasingly choosing on spec rather than price and are prepared to travel to snap up grade-A.
One concern he does have for landlords is their readiness for energy efficiency regulations that state all commercial stock must be EPC grade C by 2028.
“My honest opinion is that a lot of landlords have been backed into a corner with the EPC stuff,” he says. “I think 2028 is going to come round a lot faster than people expect, and at the moment landlords are on one of two sides of the fence: one being that it’s too expensive to bring those EPC grades up and the other being that it’s ages away and they have time, when they really don’t.”
His solution? Like many, he believes a relaxing of the rules is inevitable. “My honest opinion is that it’s going to get kicked back,” he says. “I just can’t see how it’s achievable for a lot of landlords.”
A pretty gritty city
Arkinson calls Birmingham a “gritty city” in comparison to “glamourised” Manchester, but he believes its grip on the title of second city remains firm.
“I notice that the PR in Manchester – influencers, social media and the creative arts – is a lot bigger than it is in Birmingham,” he says. “But on the flipside we’ve had the likes of HSBC, Deutsche [Bank], Goldman Sachs and BT all expand or move into the city. I think it’s about playing our position, really, rather than trying to achieve this glamorous PR stunt that Manchester’s got – just getting the basics right and attracting the right people.”
And you sense this philosophy applies to the wider West Midlands region: if it can manage its basics in terms of supply, the right people will be queuing up.
EG’s Dealmaker of the Month is selected based on deals submitted to EG Radius through our On-Demand Rankings. Click here to find out how to submit your deals.
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