Confidence is returning to the South Coast industrial market according to the latest market commentary by Bournemouth-based commercial agents Goadsby:
The local industrial/warehouse market turned a corner in October 2013 and activity noticeably picked up around Easter this year. Demand for units in excess of 20,000 sq ft from local, regional and national companies has picked up due to an improvement in business confidence and for both freeholds and leaseholds. However, occupiers are now finding that there is little suitable stock available and companies are having to decide whether to compromise on a building which falls short of their requirements or whether to invest more heavily by having a unit built for them and which normally means a wait of at least 12 months.
DESIGN AND BUILD
Over the last few months we have seen a significant increase in the demand for design and builds which can have the following benefits:-
• Detached rather than semi-detached or terraced
• Choice of plot
• Input into the shape and importantly the height of the building
• Control over the number and position of doors and windows
• Availability of additional land for future expansion or yard
At present, occupiers have several sites offering freehold D&B solutions to choose from in the central south coast region including the following:-
• 35 acres at Aviation Business Park, Bournemouth Airport
• 25 acres at Woolsbridge Industrial Park, Three Legged Cross
• 3 acres at Vantage Way, Poole
• 2.5 acres at Aston Way, Poole
• 4 acres at Forest Gate, Ringwood
• 4 acres at Sopers Lane, Poole
• 2 acres Parkway Farm Business Park, Poundbury, Dorchester
• 5 acres Kingsmead Business Park, Gillingham
• 11 acres Osprey Quay, Portland
SPECULATIVE DEVELOPMENT
There have been a number of successful speculative developments in the area and most recently in Christchurch and Poole where demand has been strong for small freeholds of up to £150,000. Purchasers are attracted by and will pay more for units with a high specification, 6.5 metre eaves height or more, and good parking and loading. Investors should see yields of 6.5-7% once the units are let and typically 40% of all new local speculative schemes are purchased by investors.
RENTS/PRICES
Both rents and prices have been fairly static over the past 5 years however, incentives being given to tenants are starting to reduce.
SUMMARY
We are predicting that the market will continue to slowly gain momentum and there should be modest short term rental and price growth driven by new developments and lack of existing quality stock. Funding problems that were stifling the freehold market 3-4 years ago are now easing however, the requirement for banks to employ their own solicitor can often delay sales by several months, particularly for purchases in excess of £1M.
Overall, the local and regional business mood appears to be optimistic.
