Take-up of industrial units above 50,000 sq ft in the South West slowed to 245,595 sq ft during the second half of 2017, according to the Logic research report released by property consultancy Knight Frank. The total take up for the year of 1.9m sq ft was 40 per cent less than the previous year.
Russell Crofts, head of the Knight Frank industrial agency team in Bristol, said: “The comparative slowdown in occupier activity was mainly due to a number of ‘big box’ requirements being satisfied in the second half of 2016 and the first six months of 2017. This spate of activity culminated in Amazon’s 1.25m sq ft unit at Central Park, Bristol during that period.
“But looking beyond the headlines reveals a lack of supply in key areas of the market, which is limiting take-up across the region. There were no significant deals in excess of 50,000 sq ft in the last six months of 2017.”
He added that the Logic report showed that developers were now responding to the shortfall in supply of units in the 100,000-250,000 sq ft size range in the South West. These included DB Symmetry’s 217,000 sq ft unit at Swindon; St Francis & iSec’s 115,000 sq ft unit at Filton, Bristol; Richardson’s 105,000 sq ft unit at Severnside, Bristol; and St Modwen’s 150,000 sq ft development at Avonmouth. All were either completed or due for practical completion in 2018.
Together with this increase in development activity, Logicor would be bringing two refurbished units of 248,000 sq ft and 312,000 sq ft to the Bristol market in the first half of 2018.
“Land acquisition and development in the mid-box – 50,000 sq ft to 100,000 sq ft – category have been a feature of H2 2017,” Russell Crofts said. “The most notable development has been the joint venture between Barberry and Richardsons, which acquired around 35 acres at Central Park, Bristol for a total development of some 550,000 sq ft of industrial units ranging between 30,000 sq ft and 100,000 sq ft. Construction is due to start in H1 2018. “
Rents continued to rise across the size ranges in both the prime and secondary market, although growth had been at a slower rate than witnessed over the previous two years. Rental growth had been most pronounced in the new small and mid-box categories where very low levels of supply had allowed developers to secure higher rents in the range of £7.25 to £8.50 per sq ft.
For industrial units above 50,000 sq ft, headline rents were £7.00 in Bristol, £6.75 in Swindon, £6.25 in Exeter, and £5.00 in Plymouth.
“Land values have again risen, although the supply element of the market is starting to be a concern,” said Russell Crofts. “Strategic development sites have been identified in a number of major logistics and distribution locations, including Swindon, Gloucester and Bristol.
Looking ahead, he said the reduction, and ultimate loss, of the tolls from the Severn Crossings would impact on the market in 2018. “The region relies heavily on labour supply from South Wales, and there will be opportunities for occupiers to exploit this by locating in South Wales.”
