According to Savills latest Big Shed Briefing, take-up of industrial space (units of 100,000 sq ft +) in the East of England was just 470,000 sq ft (43,664 sq m) in 2018, signifying an 83% decrease year on year. This can be attributed to the chronic lack of supply in the region.
Even with the delivery of 353,732 sq ft (32,862 sq m) of speculative space at Suffolk Park in Bury St Edmunds, the total supply of units over 100,000 sq ft (9,290 sq m) stands at just 861,833 sq ft (80,066 sq m) across five separate buildings. As a result, Savills anticipates that rents are likely to increase by as much as 10% on existing good quality stock.
Key deals for the region in 2018 included online retailer Yours Clothing taking 127,470 sq ft (11,842 sq ft) at Newcombe House in Peterborough and Sealey Professional Tools purchasing a 7 acre (2.8 hectare) site in order to construct a 110,000 sq ft (10,219 sq m) unit at Suffolk Park. The largest transaction was LDH Ladoria’s purchase of a site at Ipswich Gateway where Panattoni are constructing a 230,000 sq ft (21,367 sq m) warehouse.
William Rose, director in the business space team at Savills Peterborough, comments: “At present take-up across the East of England is being thwarted by an acute lack of stock, yet we are aware of a number of occupiers who are interested in taking space in the region. There remains confidence in the market as proven with the number of smaller speculative units that came out of the ground in 2018 and we are positive that further development announcements are soon to follow.”
Savills notes that, in contrast, activity for smaller units in the East of England remains strong. Aberdeen Standard’s speculative development of eight units at Axis Park has provided new lifeblood to the market and has already generated significant interest amongst potential occupiers.
William adds: “Currently the industrial market remains propped up by smaller scale transactions but we believe that this is likely to shift over the next couple of years as development activity resumes. Peterborough in particular has an excellent track record, as proven by four consecutive years of growth and the success of Newlands Gateway Peterborough scheme so it really is a case of not if but when.”
