The latest Industrial Intelligence report released by leading UK commercial property adviser, Bilfinger GVA, reveals that land values are continuing to rise due to the competitive bidding between investors and developers who are keen to invest in a sector that is still under supplied.
UK industrial land values have increased across the UK in the past year by circa 23%.
There’s a widening gap however between land values in London and the regions – in Park Royal, London, values reach some £2.6m an acre, while in Bristol they reach £400,000 an acre, and in South Wales £250,000 an acre.
Paul Hobbs, Bilfinger GVA Director within the industrial agency team in Bristol says, “The South West industrial property market has followed the national trend, and seen strong take-up during the whole of 2015. The distribution warehouse market continues to benefit from the immense structural changes still sweeping through the retail sector. There are plenty of large-scale distribution requirements across the regional markets, with retailers driving demand. Non-food retailers and particularly discount and internet retailing is particularly active.
“The South West market, however, has seen only limited development activity and the declining supply of high quality space over the last 12 months means there is virtually no prime standing stock available, and only one significant speculative building scheme underway.
“Internet retailing remains a strong driver of growth. We have seen a raft of deals in the 40,000 sq ft – 80,000 sq ft sector in the last six months as the parcel companies have a merry-go-round of deals, and pressure builds before the Christmas rush. Hermes has taken 40,000 sq ft, Fed Ex 53,000 sq ft, DX 60,000 sq ft, DHL 58,000 sq ft.
“Similarly Geopost is still progressing a deal in North Bristol with target completion past 2016.
“The result of this spate of deals is an absence of the mid-range buildings that Bristol needs, and no spec standing to date to fill the gap.”
The Bristol region boasts a raft of oven ready sites for developers prepared to spec build.
Paul continues, “Unlike other regions in the UK, here in the South West and into South Wales, we have a raft of oven ready sites with B8 footprint capability of all sizes up to 1.2 million sq ft. Some have detailed planning permissions for immediate build-out, such as the Central Park scheme in Avonmouth where Farmfoods took 176,000 sq ft.”
He concludes, “The flow of big shed stock stopped in 2008 as the retailers, such as the Co-op, Tesco, Asda and Sainsbury’s finished their regional re-organisations. Most of this surplus has now been let or in several cases re-occupied.
“We have seen a number of false dawns on some large footprint enquiries but we anticipate a bounce-back for the distribution development market in 2016, with several projects on the drawing board, including a major new 40 acre urban logistics project at Filton, North Bristol with St Francis Group and Marcol, on site during 2016, and a major regional requirement for The Range.”
