Research article

Standing still is not an option

While the agricultural and residential sectors will continue to dictate performance, rural estates need to evolve. Developing new income streams is essential

There have been significant changes in both the structure and occupancy of rural estates since our first benchmarking survey in 1996. Back then, the average area of an estate was 6,600 acres. Today, it’s down one-third to 4,400 acres.

There has been a similar reduction in the number of residential properties during the same period – from 82 to 55. However, this decrease has slowed in recent years.

By contrast, there has been a significant increase in the area of commercial workspace on estates. Since 2000, the average area has gone up more than three-fold, from 3,750 sq ft to in excess of 12,500 sq ft.

Regional variations

There are regional differences in the structure of estates. The smallest, on average, are in the South East, but they have one of the largest areas of commercial workspace and highest residential rental values driven by the opportunities created by proximity to London. When it comes to commercial space, the average split across England between office, industrial and storage and distribution is roughly 20%, 40% and 40% respectively.

However, there is diversity across the country. In the South East and South West, retail is predominant, while office use dominates in the North and is significant in the East Midlands and South East.

Figure 1

FIGURE 1Estate structure* Location and a diversity of property assets offer a mix of opportunities

Source: kamaco Research | Note: *Average over the past five years

Move to market rents

In addition to estate structure, there have also been significant changes to occupancy in the agricultural and residential portfolios.

In the past 20 years, we have seen a shift from traditional and regulated occupancy to tenancies at market rents as property has become available following assessment of staff needs against the economic returns from the housing portfolio.

This has also resulted from changing tenancy structures from AHA to FBT, introduced in 1995, where there are no successors to sitting tenants. FBTs tend not to include residential properties and are often limited to land and buildings.

Figure 2

FIGURE 2Occupancy overhaul Addressing the economic returns from the estate’s assets

Source: kamaco Research

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Simon Smith

Simon Smith

Senior Director
Research & Consultancy

kamaco Two Exchange Square

+852 2842 4573

 

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