THE commercial property market is moving too quickly and is in danger of overheating if interest rates do not rise soon, according to an industry expert.
James Appleton-Metcalfe, managing director of property investment management company Citivale, said in the last 12 months prices have rocketed to 2005/6 levels at a rate which is unsustainable.
“The concern is that the market is getting overheated,” he said. “We have gone from year 2000 pricing to 2005/6 pricing in the last 12 months. That trajectory cannot continue. It needs to tail off.”
He added: “If the Bank of England’s base rate steps up next year, as people predict, that may well have the desired effect of cooling off the investment market.”
Leeds-based Citivale, which was launched in 2010 by Mr Appleton-Metcalfe, a former property fund manager, turns around struggling multi-let office and industrial assets, reducing void rates, building on rents and increasing property values.
The company, which reports to pension funds in London, currently has more than £100m of assets across 28 sites in its portfolio.
Clients include Kennedy Wilson, CBRE Investors and Black and Decker, which is behind a new research and development centre in Durham.
It broke through the £100m barrier with an appointment to manage the Pavilion Business Park, off the M621 in Leeds.
The company manages 16 sites in Yorkshire.
Citivale is often brought in by property owners to manage assets that are struggling or need time spending on them.
Last June, it was appointed to Ringway Industrial Estate in Huddersfield, which was 50 per cent empty.
Since then it has reduced the void to 8.4 per cent following a refurbishment programme and marketing campaign.
The other side of the business is joint venture property investment, an area Citivale is keen to expand.
“We approach potential partners and tell them why it would be a good idea to buy a certain property with us and how we can make a good return,” Mr Appleton-Metcalfe said.