Research by GVA, the UK’s largest independent commercial property consultant, shows how UK business parks have reached a positive turning point.
The bi-annual Business Parks report states for the first time since the downturn, there has been a significant fall in availability and an increase in construction activity, marking a positive shift over the past six months.
The report indicates that business parks have seen the first significant fall in availability since the downturn in 2008, with overall activity at the end of June standing at 17.6 million sq ft, a 5 per cent fall from tis peak of 18.5 million at the end of 2012.
By far the largest drop in availability has been in the South East, however the Midlands has maintained one of the lowest vacancy rates of any region over the last 12 months.
Adrian Griffith, Associate in GVA’s Midlands office, said: “What has been particularly noticeable in the Midlands is the level to which we’ve seen availability decreasing in some locations more than others. Sites around the M42 and M5 in particular have seen a considerable fall in availability in the last 12 months.
“This has had a knock-on effect in terms of the incentives offered by landlords to attract tenants, with some control now being regained by landlords. In some cases, we have seen incentives reduced by 40 per cent compared to last year.
“This week’s announcement of the £1.5 billion investment being made by Jaguar Land Rover may have a substantial effect in the Midlands, particularly in North Warwickshire and around Solihull, with occupiers in the supply chain looking to either renew and extend existing tenancies or move into the area from elsewhere.”
UK business park office take-up during the first half of 2013 totalled 2.1m sq ft, 12% above the five-year six-monthly average of 1.9m sq ft. Activity was strongest in the South East and Scotland with 300,000 sq ft deals in both Farnborough and Aberdeen, however activity was more subdued and below the five-year six-monthly average in other regions.
Carl Potter, Senior Director and national head of offices at GVA comments: “Take up is above average thanks largely to the two major deals in Aberdeen and Farnborough, the latter of which we secured on behalf of our client BMW Group. What’s most encouraging is that the business of building is back on the agenda and with market sentiment at a six year high this will only improve, certainly in the short term.”
The amount of office space under construction in UK business parks remains at a low level, however on a positive note, the report has recorded the first upturn in activity within the last five years. Space under construction currently stands at 1.1 million sq ft compared to a survey low of 470,000 sq ft six months ago.
Carl Potter continues: “Although stock levels are still relatively high, the most buoyant areas have a limited supply of good quality availability, with only a handful of units over 10,000 sq ft. Larger occupiers looking for good quality buildings will have to start considering pre-lets.”
