Research carried out by leading surveyors Colliers International suggests that a clear lack of industrial units in the South West may hinder the growth of the local economy.
Furthermore this limited supply of space combined with an increase in demand is leading to as significant increase in rental levels across the region.
Strong demand for units between 10,000 to 30,000 sq ft has seen secondary rents increase over the past year by almost 30 per cent in Swindon and Bristol to £4.50 per sq ft £6 per sq ft respectively.
There were also increases in the smaller markets of Exeter and Gloucester of 18 per cent and 14 per cent respectively, with prices per sq ft increasing to £5 in Exeter and £6 in Gloucester.
Prime rents also showed significant improvement, rising by 15 per cent in a year to £8 per sq ft in Bristol, and by 10 per cent to £6.50 in Swindon.
Tim Davies, Director in the Industrial & Logistics team at Colliers International in Bristol, said: “An acute shortage of units combined with an increase in occupier demand is forcing rents to record levels in the South West.
Mr Davies added that there had been a marked increase in market activity, and that this had in turn led to improved confidence among developers.
“Clear evidence of rental growth and access to funding is encouraging developers to speculatively develop units for the first time in a decade,” he said.
“I think that new stock is an absolute must for the South West. I am passionate about the success of our region and I would be hugely disappointed to see local companies being forced to move out of our region or even abroad due to lack of accommodation.”
Colliers’ research revealed that on average rents across the UK as a whole have jumped considerably between June 2014 and July 2015 – by 18 per cent for big sheds and 15 per cent for smaller sheds.
Big sheds in the primary market increased by an average of seven per cent throughout the UK and smaller sheds by 11% since January.
The highest prime rents in the UK remain at Heathrow, with average prices at £15.00 per sq foot unchanged since June 2014.
Len Rosso, Head of Industrial and Logistics at Colliers International added: “Shortage of new supply coupled with expansionary activity from occupiers keen to take advantage of the more benign economic environment, meant that secondary rents have seen sharp upward movement in the last 12 months.
“Prime asset rents are significantly up year and on year but for those occupiers trying to avoid paying the higher prices, the secondary market is the next option. This has increased demand for secondary stock so consequently, rental prices are also rapidly rising.”
