Fourth quarter slowdown adds to reduced year for Wales industrial property take up

A slowdown in the final quarter of the year saw the take up of industrial property over 50,000 sq ft in Wales reach just under 2m sq ft in 2022, down significantly from the 3.49m sq ft in 2021 and the 2.74m sq ft in 2020, according to research from Knight Frank.

Neil Francis, head of Logistics & Industrial at Knight Frank in Cardiff, said: “After a strong third quarter where 1.3m sq ft was transacted, the final quarter (Q4) witnessed a slowdown in take up for large units, with just one deal of 103,000 sq ft completed across all of Wales.

“This was the 103,000 sq ft letting on Tafarnaubach Industrial Estate, Tredegar to Energizer Auto UK.”

Availability for units over 50,000 sq ft currently stands at around 4.6 million sq ft, consisting of 29 properties across Wales. This includes the 1.6 million sq ft at Ford, rumoured to be under offer with completion expected in 2023, which will lower availability.

The Knight Frank research showed that the volume of new-build projects under way in both South and North Wales continues to be a positive feature.

In South Wales these include Phase 3 of St Modwen Park in Newport, comprising units from 17,000 to 43,000 sq ft. The units completed in December and the 17,000 sq ft unit is under offer with a new headline rent being secured.

Neil Francis added: “Plans are progressing to continue this speculative development with three further units of 52,000 to 117,000 sq ft and pleasingly the larger unit is under offer on a pre-let basis with strong interest the other two.”

“In Ebbw Vale, much needed new space close to the Heads of the Valleys Road is under construction with the Welsh Government on site for a 50,000 sq ft development which is due to complete late in 2023.

“Cubex continues its expansion into South Wales by submitting planning for 67,000 sq ft in Wentloog, Cardiff, and London Metric is also in for planning for its 37,000 sq ft unit at Junction 32, Cardiff.”

In addition, Knight Frank reported significant growth and demand in the development of smaller workshop and business units of up to 1,500 sq ft, typically built in phases on sites of between one and two acres, and with a design and layout that focuses on occupiers who do not require a large amount of circulation or deep loading yards.

Neil Francis commented: “These schemes are proving attractive to local companies that want to own their own property, and the sustained demand is driving up capital values.

“We also continued to see good levels of enquiries for all size ranges and have been busy in the sub 20,000 sq ft sector.”

Knight Frank’s Logistics & Industrial team for Wales, based in Cardiff, enjoyed a busy year with more than 530,000 sq ft of industrial property transacted in 52 lettings and 24 sales. Highlights included at the Tafarnaubach Industrial Estate in Tredegar where 103,500 sq ft was let to Energizer Auto UK Ltd on behalf of Roe Timber Frame Holdings, and a 38,000 sq ft sale in Rassau Industrial Estate which concluded via an informal tender process where nine bids were received.

In addition, Knight Frank sold and let 43 new 1,450 sq ft units at Atlantic Business Park, Barry on behalf of developer Dawan Developments; acquired 65 acres of land alongside the Heads of the Valleys Road at Llwydcoed for University of South Wales; and sold 22 acres at Imperial Park, Junction 28, Newport for the Welsh Government to SPTS Technologies Ltd.

Looking ahead, Neil Francis added: “With limited new build in the market we expect headline rents to increase as operators look to align their ESG requirements with their property needs. There are still a number of occupiers looking for stock in the region so we expect further new entrants to acquire space.

“We cannot though dismiss the wider economic impact of increased utility costs and rising Business Rates, both of which will be of concern for occupiers, and could sadly mean availability increases as inevitable business failure rises as the year progresses”.