A lack of high quality industrial units across the Midlands is leading to a significant rise in values for landlords and prompting fresh investment, reports leading independent regional agents KGA Chartered Surveyors.
KGA, which acts on over seven multi-let industrial estates across the Midlands, has seen a steady change in the market post-recession, driven both by occupiers seeking larger, higher quality, stock for business expansion, and by developers building speculatively or enhancing existing stock in good locations to accommodate this demand and align with market forces.
Richard James-Moore, Director at KGA Chartered Surveyors, explained: “Significant capital expenditure by landlords in a strong market, with limited supply, can undoubtedly create greater rental growth whereas previously such investment would not have reaped similar returns.
“Prime industrial locations to the south of the city such as the M42 corridor, Birmingham Airport and Redditch have grown organically following the recession, exhausting much of the remaining stock. Landlords of well-located properties can therefore be confident of undertaking a programme of investment on their units which will pay dividends in terms of price per square foot.
“For example, at our Manor Side Industrial Estate in Redditch, we had approximately six voids on units of around 10,000 sq ft in 2013. Following a comprehensive refurbishment programme to create units in line with occupiers needs and attract additional interest, we have managed to push rental values along by over £1 psf on previous transactions on the estate. We have let 4 units of the refurbished stock and have 2 more under offer with a further unit shortly to come on line.”
KGA has recently let two units at 21,506 sq ft to global instrument cluster manufacturer UK NSI – which works with leading brands in the automotive industry including Jaguar Land Rover and BMW. The brand, which already employs of 400 people within Redditch was looking to expand into a cost effective solution without compromising on quality or location.
Richard continues: “Rewind the clock a little and landlords would not have had the confidence to invest in their stock in this way. The market, however, has bounced back and with rental values back to pre-recession levels and a real dearth of new supply for at least another 12 months, landlords can now afford to undertake refurbishments which will dramatically affect their values and raise the quality of the stock. From an occupier’s standpoint, price is no longer the sole driver of the market.”
KGA, alongside Knight Frank, are now promoting the final two refurbished units in the North Moons Moat area of Redditch. Unit 29 and 30 (10,780 sq ft and 10,733 sq ft respectively) can be leased individually or combined to provide a total of 21,513 sq ft. Both units have undergone a comprehensive programme of refurbishment to provide new lighting, level loading doors and two storey office fit out and come complete with designated car parking and individual fenced service yards.
Elsewhere in the region Lakeside Industrial Estate and Monkspath Business Park have undertaken similar strategies and reaped the rewards with the former now fully let.