Approximately 520,000 sq ft of speculatively developed industrial space was under construction in the South West by the end of January 2019, according to the bi-annual Spec Map published by global real estate advisor Colliers International.
Major speculative developments ongoing in the region include Central Approach, The Junction, Access 18, Portside Park, Vertex Park and More + Central Park – all based in and around Avonmouth, the region’s premier industrial and logistics location.
Coinciding with the publication of Colliers’ Spec Map is the company’s Rents Map, which charts the growth change of prime rents, secondary rents and land values across the last seven years.
Rents for Grade A units over 100,000 sq ft in the UK are up by an average of 3.7 per cent year on year, with London, the South East and East Midlands enjoying the highest rental increases of 8, 6 and 5 per cent respectively.
The latest research shows that prime rents for “big sheds” in Bristol have reached a high of £7.25 per sq ft, while Exeter is at £6.50 psf and Plymouth £5.00 psf. The figure has risen 3.8 per cent in Swindon and 4 per cent in Gloucester to £6.75 and £6.50 psf respectively.
Across the South West, prime rents for multi-lets have witnessed a similar trend, with Plymouth seeing an annual increase of 18.2 per cent from £5.50 to £6.50 per sq ft, followed by Exeter at 6.3 per cent growth from £8.00 per sq ft to £8.50 and Bristol at 2.8 per cent from £9.00 per sq ft to £9.25 per sq ft.
UK rents increased by 6.6 per cent year on year, led by growth in the London (+10 per cent), West Midlands (+9 per cent) and South East (+8 per cent) markets.
Land values have also increased significantly by 26.2 per cent year on year, led by London (+60 per cent), West Midlands (+51 per cent) and East of England (+35 per cent).
In the South West, Bristol has seen a 25 per cent uplift in its land value figure, at £500,000 per acre up from £400,000 per acre on a year ago. Gloucester saw an increase of 33.3 per cent (up to £400,000 from £300,000), followed by Exeter – £425,000 from £350,000 – and Plymouth – £250,000 from £200,000.
Tom Watkins, Associate Director in the Industrial and Logistics team at Colliers International in the South West, said: “While we are experiencing uncertainty in the lead up to the Brexit deadline at the end of March 2019, the industrial and logistics sector was relatively unaffected in the previous 12 months as it witnessed almost record levels of take-up as occupiers compete to future-proof their supply chains.
“In 2018, the retail sector accounted for a record breaking 54 per cent share of total take-up as the change in consumer behaviour continues to drive demand. Combined with growing land prices, this high level of occupier demand is putting upward pressure on rents and is encouraging developers to build speculatively.”
Andrea Ferranti, Head of Industrial and Logistics Research, Colliers International, said: “A combination of a lack of supply and buoyant market activity has meant that prime rents in England, for both small and bigger sheds, increased significantly in 2018.
“More specifically, as occupiers were left with limited options to secure their properties in 2018, the gap between prime and secondary rents narrowed further as inflationary pressure on secondary rents reached 11.7 per cent for the two industrial sub-sectors.
“The industrial sector has had two stellar years in terms of investment performance, and we fully expect this the sector to remain a top-performer in 2019.”
