The South West is one of only two UK regions to record growth in the industrial property sector last year, according to the latest report by agent Jones Lang LaSalle.
The research shows take-up of industrial and distribution floorspace increased by 2% across the region – much of it driven by growing demand for large distribution buildings – so-called big sheds – around Bristol.
Jones Lang LaSalle, which has offices in Bristol and Bath, said the increase was in contrast to national figures revealing total take-up of industrial and logistics floorspace continued to fall last year due to weak economic conditions and a shortage of good-quality available stock.
Take-up of units of 100,000 sq ft and over in the region came to 2.7m sq ft last year – more than double that of 2011.
Retailers dominated with Asda starting work on its 616,000 sq ft depot on the 40-acre former Rhodia chemical works site at Severnside (pictured), and Yankee Candle, taking 170,000 sq ft at Avonmouth.
However, the smaller end of the market continued to suffer with take-up of units from 1,000 sq ft to 99,999 sq ft totalling 3.4m sq ft – 28% down on 2011.
The figures show that a total of 6.1m sq ft of industrial and logistics floorspace was taken up in the South West in 2012.
Jones Lang LaSalle industrial & logistics agency director in Bristol, Paul Baker, said: “While it remains in most instances an occupiers’ market with landlords having to offer attractive incentive packages to secure occupiers, there remains a shortage of new or good quality second-hand space and when this type of space does come to the market there is frequently competition from occupiers.
“Developers remain frustrated by the build-to-suit market as occupiers remain unwilling to accept that in the absence of any existing buildings opting for a bespoke solution is the only answer.
“This situation has got to change but with very little or no speculative development supply of good quality space it is unlikely to change overnight.”
As at February 2013 there was no new space speculatively under construction across the region.
Meanwhile prime headline rents remained broadly flat in the year to December 2012. Rents slipped back slightly in Bristol and Exeter but remained unchanged in Plymouth and Swindon.
Overall, Jones Lang LaSalle’s UK Industrial Property Trends report predicts:
- Demand to increase this year, as the economy gradually picks up;
- A pick-up in speculative development;
- Some modest rental growth, although largely confined to core markets;
- Investors to continue to focus on multi-let industrial stock in London and the South East;
