Online sales spark rise in industrial unit take-up
ONLINE purchasing and the push for next day delivery has led to notable growth in the industrial and logistics market with Wales one of the strongest performers in UK, according to new research from Lambert Smith Hampton (LSH).
Last year Wales saw a take-up of 5.1 million sq ft which was 12% higher than 2016 and 9% above the five year average, while 2017 was also a record year for grade A takeup, at 700,000 sq ft. However, supply fell by 21%, the sharpest contraction of any UK region or nation.
Newport saw strong take-up growth of 5.9%, with availability down 5.8%
The introduction of IP5 at Imperial Park in the city saw some much needed grade A stock coming into the marketplace last year, with headline rents increase to £4.50 per sq ft. In its annual report LSH said Newport’s secondary market is strong, with high levels of interest and rental values increasing. The removal of the Severn Bridge tolls will boost the sector, but the M4 Relief Road will determine how much the region can benefit.
Swansea’s take-up rose 5%, with availability falling 5.2%
The city saw rents and capital values increased for prime and secondary premises in 2017 with freehold purchases now accounting for up to 55% of total floor space transacted. And 2018 has got off to a strong start with both the sale of the 47,500 sq ft former Pure Wafer Building in Swansea Vale completed as well as the 26,500 sq ft Fabian Park in Neath Port Talbot.. However, LSH said there is an acute shortage of grade A choice accommodation in the market.
Cardiff saw take-up rising 0.8%, with availability fell 3.6%. LSH said a lack of new space and development, alongside buoyant demand, has put pressure on existing stock in the capital.
Voids are low with reduced incentive packages and headline rents at £6.00 per sq ft. The multi-let industrial investment market has experienced significant yield compression.
Meanwhile, demand for well let, well configured single let industrial investments that require less active asset management remains robust but yields are not as strong as those in the multi-let sector.
So, should investors simply take advantage of trends in e-commerce and look to build?
Jason Thorne of LSH’s Swansea-based industrial team, said: “To secure long-term success investors will need to be aware that the equation is not so simple.
“To succeed and command a premium, landlords and developers will need to collaborate with customers and be focused on what their business will need. Start with what the customer wants, understand what the business will look like in the foreseeable future and then work backwards to find the right solution.”