Jones Lang LaSalle Incorporated, which has offices in Bristol, Bath and Exeter, has published new industrial research which shows a 2% increase in take-up of industrial and distribution floorspace in the South West.
The South West and North East were the only two UK regions to record an increase in take-up in 2012 compared with 2011.
The increase comes as national figures reveal that the total take-up of industrial and logistics floorspace across the UK continues to fall, due to weak economic conditions and a shortage of good quality available stock.
Increased activity in big sheds has driven the South West market, with take-up involving units of 100,000 sq ft and over totalling 2.7 million sq ft – more than double that registered in 2011. The retailers have dominated this take-up with the likes of Yankee Candle, Oak Furnitureland and Asda all taking space.
The smaller end of the market continues to suffer with take-up of units from 1,000 sq ft to 99,999 sq ft totalling 3.4 million sq ft – 28% down on 2011.
The figures show that a total of 6.1 million sq ft of industrial and logistics floorspace was taken up in the South West in 2012.
Paul Baker, director Industrial & Logistics agency, Bristol said:
“While it remains in most instances an occupiers’ market with landlords having to offer attractive incentive packages to secure occupiers, there remains a shortage of new or good quality second-hand space and when this type of space does come to the market there is frequently competition from occupiers.
“Developers remain frustrated by the build to suit market as occupiers remain unwilling to accept that in the absence of any existing buildings opting for a bespoke solution is the only answer.
“This situation has got to change but with very little or no speculative development supply of good quality space it is unlikely to change overnight.”
As at February 2013 there was no new space speculatively under construction across the South West.
Meanwhile prime headline rents remained broadly flat in the year to December 2012. Rents slipped back slightly in Bristol and Exeter but remained unchanged in Plymouth and Swindon.
Overall, Jones Lang LaSalle’s UK Industrial Property Trends report predicts:
· Demand to increase this year, as the economy gradually picks up;
· A pick-up in speculative development;
· Some modest rental growth, although largely confined to core markets;
· Investors to continue to focus on multi-let industrial stock in London and the South East;
· Prime multi-let industrial yields to remains stable in the short-term with poorer secondary yields moving out further.
