Confidence returns to the county’s commercial property market – as Kent’s economy grows faster than UK’s

With business confidence higher than last year and the economy looking more positive, the outlook for the property industry is improving, according to the 33rd edition of the annual Kent Property Market Report.

The latest figures from Kent County Council show that the county’s economy, (with Growth Value Added) grew by 3.2% in 2023, ahead of the national average of 2.8%. Also, the region’s employment rate for working-age residents has been steadily increasing, rising to 77.5% in 2023, up from 75.8% in 2021, according to the Office for National Statistics.

The Kent Property Market Report is produced by Caxtons Property Consultants, Kent County Council and Locate in Kent. It again shows the industrial and distribution sector is expected to be the county’s top-performing property sector. This is helped by leading logistics and warehousing developers making major investments and tackling the under supply of new high-quality space, which had been constrained over the last 10 years.

Mark Coxon, Head of Commercial Agency at Caxtons, said: “National crises, economic turmoil and political uncertainty have hampered the property market over the last four years, accelerating change and impacting the sector with predictable and sometimes surprising outcomes. However, notwithstanding any effects of the recent Budget, the economy is now improving and there is a greater degree of confidence that is likely to lead to calmer waters in 2025.”

The high demand for industrial space and the region’s role as a critical logistics hub has provided a steady and encouraging level of economic activity, with Kent offering some of the largest speculative warehouses in the South East during the last 12 months.

Highlighting the significance of Panattoni’s £400m+ investment in the county’s property sector, saw Tony Watkins, the company’s London & South East Development Director give the event’s keynote presentation.

Work recently began at Panattoni Park, Sittingbourne on the largest speculative property development in Kent in more than a decade, where a total of 644,000ft² (59,830m²) of development is under way. The Kemsley site will eventually offer a total of 773,000ft² (71,814m²), on a 36-acre site (14.6-hectare) site. This investment at Sittingbourne is on top of Panattoni Park Aylesford, where 144,000 ft² (13,378 m²) was delivered for Amazon, and a further 621,072 ft² (57,700m²) is due for practical completion for Tesco by December this year.

High-quality space coming on stream and meeting untapped demand has seen average logistics and distribution rents across Kent rise to £12 per sq ft, with vacancy rates nationwide dropping from 9.2% to 5.2%. Much of the demand in 2024 has been for Grade A space, offering high levels of sustainability; and for speculative units over 400,000ft² (37,161m²). Caxtons predicts this trend will continue into 2025.

Kent has experienced minimal growth in business park rents this year, both Kings Hill and Crossways now have little availability, as have Chatham Maritime and Gillingham Business Park. The county’s scientific community, served by Discovery Park and Kent Science Park, continue to attract new occupiers. At Discovery Park, new and existing tenants took about 15,000ft² (1,394m²) of space, and Asymchem, a Chinese company took more than 115,000ft² (10,684m²) for its new European headquarters.

Compared to the rest of the South East, Kent has been performing well when it comes to increasing office rents. The largest office take-up this year was within the healthcare, pharma, and industrial sectors. The county’s office rents average £12.50 per ft² an increase of 2%, with some towns showing greater increases, such as Ashford 20%, Sittingbourne 6% and Medway 3%.

Roger Gough, Leader of Kent County Council, added: “After the economic uncertainty of recent years, Kent’s property market is showing positive signs of recovery. Investor confidence is returning, helped by our proximity to London and mainland Europe, with it having a positive impact on our county.

“As we digest the Budget and its implications for the Kent economy, a clear opportunity is a devolution settlement for Kent and Medway bringing funding and powers locally to help us drive the economic and social prosperity of our county for our residents and businesses, making Kent and Medway an even better place to live, work and invest.”

After nearly a decade of painful decline at the hand of online retailers, the return of ‘bricks and mortar’ shopping and cheaper rents have led to a slightly better year for the county’s retail sector. The Office for National Statistics has estimated that retail sales volumes have risen by 1% in August 2024, following a rise of 0.7% in July 2024. Department stores and sports equipment stores reported a boost and stores such as Sainsbury’s, Aldi, Lidl, Marks and Spencer, and B&M are in expansion mode.

Nick Fenton, Chief Executive of Locate in Kent, said: “Kent’s core strengths include its location and resilience so it’s no surprise that the county’s economy is outperforming the rest of the UK – businesses simply want to be here. Almost 78,000 properties and sites were viewed on our property portal in the last year alone. We’ve seen some exciting projects come through.  This latest report confirms the likely prospect of a lot more investment to come.”

More than 250 property experts attended the launch, held at Ashford International Hotel on Wednesday 6 November. The conclusion was that the county is moving towards calmer territory in 2025, with key sectors of the property market performing well or showing signs of improvement.

For further information on the latest performance of the county’s property industry, visit www.kentpropertymarket.com