Take up of industrial/warehouse units across the South West in 2011 has kept up with the ten year average despite an incredibly challenging market.
New figures published by the Industrial Agents Society (IAS) Western Branch show 2.4m sq ft of industrial space was sold or let last year with Bristol remaining a key location and showing promising signs for 2012.
The rapid growth of online retail along with demand from the big retailers for distribution space will remain key drivers of the South West industrial and logistics market in 2012, according to national research carried out by Jones Lang LaSalle also published this month[1].
Office for National Statistics (ONS) figures revealed that internet retail sales in 2011 totalled £837 million and accounted for 11% of all retail sales in the UK. The take up of big box logistics floor space intended solely for internet retailing made up 11% of all Grade A space let or sold.
With very little speculative industrial development to speak of in the region, Paul Baker, head of Jones Lang LaSalle’s industrial and logistics team in Bristol said it is the food retailers’ design-and-build projects that are the main focus for activity.
Paul Baker, director, commented:
“Online retail is expected to continue to grow at a faster pace than overall retail sales and clearly this could have an impact on the demand for traditional distribution floorspace to service ‘bricks and mortar’ stores.”
Last year saw Morrisons open the doors of its newly built regional distribution centre in Bridgwater, with more than 750,000 sq ft of space along with B&Q’s new 800,000 sq ft facility in Swindon. In 2012 the spotlight falls on The Co-operative Group’s 450,000 sq ft regional distribution centre being developed at Avonmouth. Work on the scheme started in the summer of 2011 and is due for completion by spring 2012 when it will start to supply more than 400 Co-op stores in Bristol, North Somerset and South Wales.
Paul Baker added:
“Demand for big box distribution space looks set to continue, with talk of the first 1 million sq ft requirement for the South West.
“As well as retail, the growing waste management and recycling industry in this region is becoming another major area of activity. Bristol’s 50% recycling rate offers huge potential for growth.”
In September last year New Earth Solutions, the Dorset-headquartered waste treatment and renewable energy specialist, opened a waste treatment facility in Avonmouth. Other similar waste treatment and energy facilities will continue to spring up across the region for the likes of Sita, Eon and Cyclomax, driven by commercial and public-sector requirements.
“Elsewhere in the industrial market there are different dynamics in play. While speculative development has all but ground to a halt, demand for second hand industrial space has seen a noticeable increase from manufacturers and distributors.”
Bristol will see its first speculative development for a number of years at Longwell Green where IM Properties have started work on a 50,000 sq ft, eight unit trade park scheme.
“We’ve experienced high levels of interest in this scheme and have already prelet two units to Halfords and Tool Station and are confident that the remaining units being built speculatively will be snapped up.”
