Take-up of large industrial units in the South West has soared this year to its highest level since the recession, with a number of huge distribution schemes around Bristol putting the city in the driving seat.
The total take-up reached 2.4m sq ft during the first six months of this year – more than double the level achieved over the same period last year, according to research from property adviser Knight Frank. 
The figure – for units above 50,000 sq ft – was the highest recorded since 2007. For all sizes of industrial buildings across the region, take-up was even higher at 3.6m sq ft.
Knight Frank Bristol industrial agency team partner Russell Crofts said two significant deals at Central Park, Severnside, accounted for a large chunk of the take-up.
Homeware retailer The Range bought 55 acres to build a 1.2m sq ft regional distribution centre (RDC), due for completion by the end of next year, and supermarket group Lidl, which bought 33 acres to build a 600,000 sq ft RDC.
In the same area, Davies Turner Logistics bought 12 acres to build a 130,000 sq ft building and real estate development and investment company Mountpark Logistics acquired 20 acres to build a speculative 400,000 sq ft scheme, pictured above.
Russell Crofts, pictured below, said: “The large-format B8 storage and distribution sector has driven demand from both retailers and third-party distributors.
“The ability to acquire land has been a key element to the market, and sale and leasebacks will follow.”
The active market has meant supply in the first half fell by 30% on the previous six months. However this limited availability combined with strong occupier demand has given developers the confidence to start speculative schemes, including Mountpark’s at Central Park with three units covering 400,000 sq ft and, across the city, St Francis’s Horizon 38 Filton on the former Rolls-Royce factory site with 250,000 sq ft across four buildings. These are due for completion in the first and third quarter of next year respectively. 
“The new speculative schemes will establish new rental benchmarks for speculative units in North Bristol, with Horizon 38, with quoting rents from £7 per sq ft upwards; and Mountpark in Severnside with rents at £6 per sq ft plus for 200,000 sq ft,” said Russell Crofts. “There is also scope for a smaller unit scheme within the city.”
Requirements for mid-size buildings had re-emerged since the Brexit vote and there had been strong rental growth in this sector due to the lack of supply. Persistent rental growth this would also underline the potential for speculative development.
Russell Crofts added: “There remains strong interest in all regional markets from Amazon who continue to demand both second-hand and new space.
There are also a number of regional manufacturing and distribution requirements totalling over 1.5m sq ft to be satisfied.”
He said delivery of the first large-scale speculative unit since 2008 over the next 12 months would establish new rent levels.
“The next six months will also see the start of a new speculative scheme addressing the mid-range market, while the proposed new motorway junction on the M49, due to start in 2017, will greatly improve access to the most strategically important area of Bristol for storage and distribution,” he said.
