Big shed developers across the South West are positioning themselves for the market upturn, despite a picture of muted activity in 2011 says a new report by the UK’s largest independent commercial property advisor, GVA.
The latest annual ‘Industrial Intelligence’ report highlights that demand weakened and take-up tailed off considerably in 2011, compared to 2010.
In the South West, we are seeing an approaching shortage of good quality accommodation, as the grade A supply chain dries up due to the lack of speculative development. This is something developers haven’t failed to spot, the report concludes.
Paul Hobbs, industrial agency director at GVA in Bristol, comments: “Availability of good stock is falling fast. Whilst there is not a drought of space, a moderate upturn could lead to a fast recovery in rents and values for existing prime stock.
“There is no speculative development in the region, and that is likely to continue throughout 2012.
“However, the South West has seen developers starting to buy sites, bringing forward new infrastructure and strategic planning strategies. We are in one of the strongest positions across the UK in this regards.
“Businesses generally exercised understandable caution in 2011 regarding expansion, however, there were some notable developments during the year. B&Q opened a 800,000 sq ft distribution centre in Swindon, as did Morrisons in Bridgwater. Co-op are constructing a 420,000 sq ft distribution centre in Avonmouth.”
This positioning for future development is occurring despite many areas of the UK having an increasing supply of secondary stock. A lot of this stock however is old and in some cases obsolete. Occupiers are thus nervous about the capital investment and dilapidations costs that could mean for them.
Activity in the distribution occupier market remains focused on retail, especially the food retailers, internet operators, discount retailers and the automotive sector.
An emerging trend also suggested in the report is an increase in major retailers looking to locate their distribution points near rail connections. One factor thought to be driving this move is the growing importance of the CSR agenda for all commercial companies.
Revealing the geographic sectors trends across the country, the energy sector is growing in the South West and Wales. EDF Energy are progressing plans for their new nuclear power station in Bridgwater, and we are also likely to see starts on site for a number of waste to energy projects where planning has been granted.
Elsewhere, the report shows that the North East of England remains a location dominated by the manufacturing industry, the Midlands remain a centre for the automotive and aerospace industries and the North West is dominated by high take-up from high street retail distribution.
