The appetite for industrial units has remained keen during business lockdown and the sector stands out in the current market and is reinforcing strength built up in the years since the financial crash of 2008.
That is the assertion made by the Peterborough office of Barker Storey Matthews (now part of Eddisons) in setting its sense of its market since the lockdown in March (2020) against an overview of sector performance in the past six to ten years.
In the years following 2008, its agency team saw the locally driven industrial property market characterised by the oversupply of units with vacancy levels in Peterborough at over 1.5 million sq ft in 2014.
Since then, demand has been consistently ahead of supply to the point where, at the end of March this year – the month of lockdown’s introduction – vacancy levels were recorded at 470,000 sq ft, just 1.7 per cent of the total stock.
By the first quarter of this year, larger logistics requirements had almost filled Gateway Park, the landmark 250 acre development by Roxhill, adjacent to Junction 17 of the A1(M). The volume distribution companies – such as supermarket giant Lidl – have already announced deals at the park and only limited options are available now.
In the weeks since March Barker Storey Matthews reports that no new warehouses have come to the market so the availability of stock is coming under increasing pressure.
In the past two months there has been a constant take-up of warehouse units in the smaller size sector in the Peterborough-driven markets of Yaxley and Market Deeping.
At the newly built Heron Court, Eagle Business Park in Yaxley, sales completed on 23 March, 02 April and 01 May. Other deals at the development which completed at the end of February and early in March, saw just two units remaining with three viewings scheduled by the third week of this month (May).
Merlin Court in Market Deeping is another speculative new-build development and it is due for practical completion next month (June). By the third week of May, three units at Merlin Court went under offer, leaving the two remaining units attracting strong interest. These add to three units which were put under offer in February and follow a surge of interest at the end of April from potential occupiers.
Barker Storey Matthews believes that the recent successes of Heron Court and Merlin Court are due to the nature of the occupiers’ businesses which, in turn, reflect the wider economic forces now in play.
These forces include the resurgence of manufacturing in the United Kingdom and the rise of internet shopping – with retailers looking to warehouse unit as opposed to retail unit property requirements.
The agent also points to the growth of the ‘green’ business sector in supporting sub sectors, such as electrical contractors and component suppliers, for electronic vehicles.
Summarising Barker Storey Matthews’ experience of the ongoing lockdown market, Richard Jones of its Peterborough office concluded, “With daily news, quite rightly, focusing on the pandemic since March and, in the past month, the huge drop in the UK’s GDP (Gross Domestic Product), the last thing a lay audience might think about the business scene is that there are businesses who are starting up and those who are moving forward.
“Yet our daily ‘working from home’ agency experience since March is a counterpoint.
“Along with other professional property peers, the industrial sector remains the main growth area of the commercial market – and the wider economy here.
“We firmly believe it will lead the way as we come through the shadows cast by the coronavirus.”