Head of Agency for Wales at property adviser GVA, Tom Merrifield, looks at how the industrial market in South Wales fared throughout 2013 and what 2014 is likely to hold in store.
On reflection 2013 proved to be a year of two halves for the industrial market across South Wales.
The first part of the year provided very encouraging signs of a return to a more buoyant market supported by a significant rise in occupier demand. However, these signals of an improvement were never underpinned by an actual rise in the transactional evidence of deals completed, so moving into the summer there was something of a less optimistic feel in the air.
The second part of the year proved to be significantly more positive with occupier enquiries running on from the summer period increasing, and evidence that completed transactions levels were starting to rise. Notable deals concluded since the usual summer lull period included the sale of Unit 6b Parc Nantgarw which comprised 121,000 sq ft of good quality manufacturing and distribution space which had been vacant and available in the market for a prolonged period.
Also noteworthy were deals concluded at Imperial Park, Newport on circa 50,000 sq ft; 40,000 sq ft let at Park Bedwas in Caerphilly where Aerfin took occupation; the sale of circa 220,000 sq ft at Link 48 Newhouse Farm in Chepstow to 3663 for distribution use and the completion of a deal on the former SPTS building in Newport to E24 Power Ltd on circa 90,000 sq ft of high quality industrial laboratory space.
The fact that these deals were all concluded in the latter part of 2013 serves to provide us with very encouraging signs of a return to a more positive and active market in 2014. Looking forward into the New Year, albeit with some caution given the experiences of the past five recessionary years, it is not inconceivable to expect a steady increase in the demand levels being reported and to anticipate significantly improved take up levels for the first half of the year as a result of the continued belief surrounding the improvement in UK’s economic conditions.
One small note of caution, it was evident that 2013 showed a significantly more limited demand and take-up of smaller space up to circa 5,000 sq ft, specifically in the Cardiff area with much of the stock that was available at the start of 2013, both of new and older specification, still remaining available at the start of 2014. The SME sector seems to continue to struggle, perhaps as a result of bank lending remaining restrictive as occupiers continue to hold fast on any expansion and/or relocation plans. With an anticipation of more fluidity in the lending markets during the coming year it is perceived this trend will improve.