Demand for industrial units remains strong, says research
OCCUPIER demand for industrial units of more than 50,000 sq ft in Wales remains strong, according to new research from property consultant Knight Frank.
Its Logic report showed that approximately 1.1 million sq ft was transacted in nine recorded deals in the second half of 2017, a level similar to the take-up witnessed in the first half of the year.
However, Neil Francis, head of the industrial agency team at Knight Frank’s Cardiff office, pictured below, said: “The overall takeup figure for Wales in 2017 of approximately 2.3 million sq ft was some 700,000 sq ft lower than recorded for 2016. This was a result of the lack of quality stock in the market, as opposed to limited requirements and activity.
“The letting of the 280,000 sq ft in Newhouse Farm, Chepstow, to CJ Dowton and the sale of 250,000 sq ft in Llantrisant to FeI Foods have certainly helped to boost this figure.”
As in previous years, there had been an increasing trend for regional companies wanting to purchase property, as evidenced by the acquisition of the 135,000 sq ft Aviation House, Waterton, Bridgend, by Willis Asset Management Ltd and Heathpak buying 69,000 sq ft in Oakdale, Caerphilly.
Mr Francis said: “On the supply side, within Wales as a whole, there is now approximately 3.5 million sq ft available for units above 50,000 sq ft, which is one million sq ft less than reported after six months of the year. This highlights the issues we are having with lack of stock in the ‘big shed’ market.” The report says that a major problem for larger units was that new build has been almost “nonexistent” in Wales. It adds that despite the success of the St Modwen development at Celtic Business Park, Llanwern – where a newbuild 50,000 sq ft unit had been let to Amazon and then sold as an investment – there remained a lack of confidence in speculative development.
Mr Francis said: “This should hopefully change in 2018, though, with the Welsh Government committing to develop 50,000 sq ft at their site in Rhyd y Blew and St Modwen speculatively developing up to 100,000 sq ft at Celtic Business Park, Llanwern, later in the year.
“Also within the 50,000 sq ft-plus market, it is pleasing to see that speculators and investors still have an appetite to purchase secondhand industrial units that provide subdivision and refurbishment options.
“Rombourne has continued to grow its industrial offering within the region by adding the former Avana Bakery to its portfolio. Close to Junction 28 of the M4 motorway, this 150,000 sq ft facility offers plenty of options for incoming tenants and will provide some muchneeded refurbished space into the market.
Looking ahead, the report says that despite a large number of requirements remaining unsatisfied within the market, the lack of good-quality stock is likely to impact take-up for 2018, and Knight Frank did not expect the same figures as reported in recent years.
Mr Francis said: “Assistance from the Welsh Government will be required in order to ensure similar take-up figures in the coming years.]
“Whether this is via development grants, rates relief or even them developing themselves remains to be seen – but all need to be considered.
“The need for new development is even more important now as the popular opinion is that the total abolition of Severn Bridge tolls and an announcement on the M4 Relief Road will generate further interest and potentially move occupiers from Avonmouth, where rents and land are more expensive.”