Record demand for industrial space helped the South West commercial property market deliver a robust first half year performance, says property consultancy Alder King in its mid-year market report.
The strong performance was achieved in spite of some investors and occupiers taking a cautious ‘wait and see’ approach leading up to the EU referendum.
The report’s key findings are:
· Industrial take-up across the South West increased to circa 4.6 million sq ft, the region’s highest half year figure for five years. This is a 31% increase on the 3.5 million sq ft take-up achieved in the second half of 2015.
· The supply of industrial stock now stands at 4.2 million sq ft, the region’s lowest level for 12 years.
· In Bristol industrial take-up was at its highest level for 10 years, reaching 2.85 million sq ft. This is just 100,000 sq ft below the city’s total for the whole of 2015.
· Speculative development is underway at Access 18, Avonmouth and Apollo Park, Yate and further schemes are planned in Filton, Emersons Green and Weston-super-Mare. These will fulfil demand for modern space and provide opportunities for owner occupiers seeking to acquire freehold property.
· The South West office market performed strongly with just under 1 million sq ft of take-up. Significant transactions in Bristol included EDF’s acquisition of 82,200 sq ft at Bridgwater House and Direct Line’s purchase of 63,125 sq ft at The Core.
· Supply across the region stands at just over 3 million sq ft. Only one new Grade A development is under construction in Bristol city centre at Aurora, Finzels Reach. Salmon Harvester/NFUM, the developers behind the successful 2 Glass Wharf, are gearing up to start at 3 Glass Wharf later this year.
Simon Price, partner and head of agency at Alder King, said: “The first half of the year saw record demand for space, particularly in the industrial sector, and despite the current political and economic uncertainty following the referendum result, we remain optimistic about the second half of the year.
“The fundamentals of our regional economy remain strong. Greater Bristol, and the South West more generally, have very limited supply which should help deliver continued activity, even in the short term, particularly in sectors where there is pressure on supply.
“The investment market is likely to remain challenging but the fundamental attractions of UK CRE investment remain unchanged to both UK and foreign investors and, in time, confidence will return.
“The proposed West of England devolution deal agreed between Bristol City, Bath & North East Somerset and South Gloucestershire councils will further help to invigorate the region’s economy and property market.”
Alder King partner Andrew Ridler, who heads the industrial agency team, added: “The industrial sector has been the primary driver of this success story. We’ve seen strong freehold demand from owner occupiers, an encouraging return of mid-range enquiries (25,000-100,000 sq ft) and a number of sizeable acquisitions of buildings and sites for large format logistics occupation. This, coupled with the ongoing lack of supply, should encourage developers to proceed with plans for new schemes and we remain confident that the occupational market will continue to perform well.”
