Short­age of in­dus­trial space sparks 10pc year-on-year rent rise

Western Daily Press (Saturday) - - Business -

THE con­tin­ued short­age of in­dus­trial space in the South West has re­sulted in rents for large units ex­pe­ri­enc­ing a year-on-year in­crease of al­most 10 per cent – the sec­ond high­est fig­ure in the UK.

The au­tumn in­dus­trial and lo­gis­tics barom­e­ter from com­mer­cial prop­erty firm Col­liers In­ter­na­tional shows that the North East has seen the high­est an­nual rent change of any re­gion for Grade A units of over 100,000 sq ft at 17.6 per cent, fol­lowed by the South West at 9.6 per cent.

This com­pares with four - the East and West Mid­lands, Scot­land and North­ern Ire­land - where rents have re­mained static at 0 per cent.

The re­search also shows that the avail­abil­ity of large units in the South West has fallen by 55 per cent over the last ten years. None­the­less this is the sec­ond low­est fig­ure of any re­gion, with an av­er­age fall of 71 per cent across the coun­try over the last decade.

Wales (down 85 per cent), the North East (76 per cent), the South East and West Mid­lands (both 75 per cent) are the worst af­fected.

Tom Watkins, as­so­ciate direc­tor in the in­dus­trial and lo­gis­tics team in the South West of­fice of Col­liers In­ter­na­tional, says a com­bi­na­tion of strong de­mand driven by e-com­merce and lim­ited spec­u­la­tive de­vel­op­ment is con­tribut­ing to the strong an­nual rental growth fig­ures in the re­gion.

“The fun­da­men­tals re­main strong in the South West and devel­op­ers have recog­nised that low va­cancy rates and high rental growth are a win­ning com­bi­na­tion, with the likes of Tre­bor De­vel­op­ments, St Mod­wen and Bar­berry Group now de­vel­op­ing spec­u­la­tively in our re­gion,” he said.

“Mean­while across the Bris­tol Chan­nel in South Wales, the mar­ket has his­tor­i­cally been less buoy­ant, but the im­mi­nent abo­li­tion of the Sev­ern Bridge tolls there has the po­ten­tial to be trans­for­ma­tive in the months and years to come.”

Na­tion­ally, re­tail­ers and whole­salers con­tinue to rep­re­sent the largest pro­por­tion of deals, ac­count­ing for 53 per cent (10.6 mil­lion sq ft) of trans­ac­tions com­pleted so far this year, which com­pares to 43 per cent in the same pe­riod last year (Q1 to Q3 2017).

Third party lo­gis­tics and trans­porta­tion was the next most ac­tive sec­tor, ac­count­ing for 24 per cent, fol­lowed by man­u­fac­tur­ing at 18 per cent.

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