Research released by JLL predicts that improving economic conditions will translate into increasing industrial property demand this year, with take up across the UK set to exceed 2013 levels.
Bristol is expected to mirror this national trend with increasing occupier confidence and demand, which puts the city in a strong position to lead the economic recovery.
JLL predicts a return to rental growth over the next four years and strong investor activity in the UK market – a trend which is already emerging in Bristol where incentives to entice tenants are not as prevalent as during the recession and demand from investors is increasing. This is partly being driven by an active SME market which accounts for 85 per cent of industrial transactions in the city.
At the end of 2013 availability of units between 1,000 and 99,999 sq ft was 17 per cent lower than a year before. Similarly, in the Greater Bristol area, the number of vacant units stands at eight per cent, down from 11 per cent 18 months ago.
JLL expects to see an increase in speculative development in the UK, with a number of ‘big box’ units and smaller multi-let schemes underway. Nationally, there is some 2.1 million sq ft of floorspace speculatively under construction, including ‘big box’ units and smaller multi-let units which will help to boost dwindling levels of Grade A stock.
Investment in the UK industrial property market totalled £4.4 billion in 2013, 70 per cent up on 2012 (£2.6 billion). JLL’s report highlights that while investor demand will remain focused on prime stock, as availability continues to fall investors will look at good quality secondary assets and the difference between prime and secondary assets will narrow.
Chris Miles, associate director in JLL’s industrial & logistics team in Bristol, said:
“Bristol and the surrounding area is one of the UK’s leading regions for SMEs, driven by a highly skilled labour force, a strong pipeline of work from major industry players, leading universities and of course a well- documented high quality of life.
“Speculative development remains a hot topic in the city. While we expect to see more speculative development in the UK, it is likely to be driven mainly by the London market. We may find that there is a lag in the regions before we see any significant speculative activity. Positive market sentiment in Bristol should however provide investors with the confidence they need to start building in 2014.”