The well-publicised lack of available Grade A stock has been a key factor in the industrial property market in Wales for the past five years.
But the surge in demand caused by the Covid-driven switch to online retailing has accelerated the problem dramatically in the last two years, according to global property consultancy Knight Frank.
Neil Francis, head of Knight Frank’s Logistics & Industrial division in Cardiff, said: “Our research shows that availability of units over 50,000 sq ft now stands below 3 million sq ft – the lowest it has been for many years.
“With so much of the good quality premises taken up in recent years and not replaced much of this larger space is of relatively poor quality and no longer meets modern occupier requirements.”
Demand has been such that Knight Frank enjoyed its highest ever turnover for industrial property transactions in South Wales in the year to the end of March 2022.
Neil Francis said: “The Covid-driven surge in online retailing cannot be denied and this led to national occupiers moving to Wales and urgently wanting new, bespoke industrial property. Meanwhile large numbers of existing manufacturing occupiers in South Wales have been keen to move to more efficient properties, having expanded as far as they can in ageing buildings and appreciating the benefits a new building brings.”
The pressure on the market is, at last, encouraging national developers to look at Wales, with St Modwen leading the way. Its early confidence to speculatively build two new units in the second phase of its St Modwen Park development in Newport paid off handsomely with 100,000 sq ft let to Genpower and 31,000 sq ft unit let to Mitel within months of their practical completion. This success has resulted in St Modwen progressing with the development of four units of 17,000 sq ft to 44,000 sq ft in the next phase whilst planning has also been secured for three units of between 52,000 sq ft and 119,000 sq ft.
Hot on the heels of St Modwen’s success, newcomers Trebor and Cubex have entered the Wales industrial market.
Trebor and joint venture partner Maple Grove Developments have received detailed planning consent for a new speculative industrial scheme of 46,100 sq ft on Pencoed Technology Park, adjacent to Junction 35 of the M4. Construction is due to commence in April and there are good early levels of interest.
At the start of this year Cubex acquired a 9.5 acre site directly adjacent to the M4 in Magor, Monmouthshire, and is seeking planning permission to develop a Grade A 160,000 sq ft logistics unit, already rumoured to be under offer. In addition it is close to acquiring four acres in East Cardiff where it will have the ability to offer up to 65,000 sq ft.
Oher proposed schemes include Colliery Business Park, a new development by Virtuous Circle Development of industrial, warehousing and urban logistics units in the Llantrisant area, and the 33,000 sq ft Axis 32 warehouse at Junction 32 of the M4 which is being undertaken by London Metric, another newcomer to the South Wales Market.
Neil Francis said: “These are all positive signs for the industrial market in Wales and I am optimistic that once we have a few more spades in the ground, and the higher headline rents now being achieved become the norm, it will give many other developers greater confidence to enter the region.
“While most of these developments are inevitably located close to the M4 motorway it is good to see the Welsh Government taking a strategic approach to attracting industrial users across the region.
“They are progressing with plans to develop a new 50,000 sq ft unit at the 36 acre Rhyd y Blew industrial site in Ebbw Vale. Construction work will begin later this year and the unit will be available to let in 2023. This will hopefully provide confidence for further developments in areas accessed by the A470 and A465 Heads of the Valleys roads.”