A severe lack of supply of good quality industrial premises is pushing up rents and increasing the prospects of speculative development returning to Southampton, according to national property consultants Lambert Smith Hampton (LSH).
The imbalance between supply and demand has contributed to the latest deal in which LSH negotiated an increased rent of £7 per sq ft for a 30,000 sq ft unit.
LSH’s South Coast office acted jointly with JLL on behalf of UK fund manager F&C REIT Asset Management to secure UTi Worldwide as tenant for Unit 2 Airways Distribution Park, Eastleigh.
The global supply chain management company, which has 313 offices and 245 logistics centres in 59 countries, has taken on a 10-year lease for the unit. DTZ acted on behalf of UTi.
Adrian Whitfield, director of LSH’s industrial and logistics team in Southampton, said the unit had been previously occupied by Magna Seating, a supplier to the Ford Transit factory in Swaythling which closed in 2013.
He added: “There is a significant shortage of sheds of 30,000 sq ft and above in this area, particularly along the M27 corridor, but demand is growing. This increasing imbalance between supply and demand is driving up rents.
“Demand in the Southampton market for sheds is strong and it will encourage new speculative developments to be built for the first time in seven years.
“The market is showing signs that this is likely to happen. The renewed demand, coupled with the fact that there is now funding available for projects and confidence is slowly returning to industry, points to the return of speculative builds sooner rather than later.”
LSH is a national commercial property consultancy that works with investors, developers and occupiers across the public and private sectors, and it is single-mindedly focused on UK and Irish property markets.
