Speculative development of industrial units could make a long-awaited return in the South Coast region this year, according to national commercial property consultancy Lambert Smith Hampton (LSH).
With the economy showing signs of recovery and the UK property investment market bouncing back to levels seen in 2007, LSH believes the industrial and warehouse sector now has all the right ingredients to support speculative development projects.
LSH has already identified a shortage of quality modern detached industrial units over 20,000 sq ft following market activity in 2013. There are currently only two units of over 30,000 sq ft available along the M27 corridor between Southampton and Portsmouth that benefit from a self-contained secure yard.
Jerry Vigus, industrial and logistics director at LSH in Southampton, said: “It has been over five years since the South Coast has seen any substantial speculative development.
“With the lack of stock combined with potential rental growth and the forecasting for investment yields compressing, Lambert Smith Hampton believes that some UK institutions will now be identifying speculative development as an attractive option.
“We have seen over the last 12 months the market showing signs of recovery with many UK institutions looking to invest in the South Coast. There have been a number of key transactions and confidence is returning to the occupier market. Incentives are also being reduced, all of which could point towards a return to speculative development demand for top quality accommodation begins to outstrip supply.”
He added: “The shortage in supply is relevant to both Southampton and Portsmouth markets. All eyes over the next 12 months will be on Test Lane South, Southampton, as ell as Voyager Park and Merlin Park in Portsmouth, along with the 20 acres due to become available on the former Ford Transit Van site.”
In 2013, there were a number of high profile transactions which included BIFFA taking a sub lease from DS Smith on Hounsdown Business Park, a unit of 125,000 sq ft. Import Services took on a new lease at Tollbar Way of 112,000 sq ft , and DHL signed a new lease, at Stoke Park, of approximately 55,000 sq ft. Este Lauder also took an additional 30,000 sq ft at Kites Croft.
LSH has also reported that a 50,000 sq ft unit they have been marketing recently is currently under offer with two tenants having to go to best bids to secure a lease.
LSH is a national commercial property consultancy that works with investors, developers and occupiers across the public and private sectors, and it is single-mindedly focused on UK and Irish property markets.
