Big shed developers are positioning themselves for the market upturn, despite a picture of muted activity in 2011 says a new report by the UK’s largest independent commercial property advisor, GVA.
The latest annual ‘Industrial Intelligence’ report highlights that demand weakened and take-up tailed off considerably in 2011, compared to 2010.
Across Wales, we are seeing an approaching shortage of good quality accommodation, as the grade A supply chain dries up due to the lack of speculative development. This is something developers haven’t failed to spot, the report concludes.
Paul Hobbs, industrial agency director at GVA in Cardiff, comments: “Availability of good stock is falling fast. Whilst there is not a drought of space, a moderate upturn could lead to a fast recovery in rents and values for existing prime stock.
“There is no speculative development in the region, and that is likely to continue throughout 2012.
“However, Wales has seen developers starting to buy sites, bringing forward new infrastructure and strategic planning strategies. We are in one of the strongest positions across the UK in this regards.
“Businesses generally exercised understandable caution in 2011 regarding expansion, however, there were some notable developments during the year such as Renishaw’s purchase of a 460,000 sq ft factory from Bosch in Miskin.”
This positioning for future development is occurring despite many areas of the UK having an increasing supply of secondary stock. A lot of this stock however is old and in some cases obsolete. Occupiers are thus nervous about the capital investment and dilapidations costs that could mean for them.
Activity in the distribution occupier market remains focused on retail, especially the food retailers, internet operators, discount retailers and the automotive sector.
An emerging trend also suggested in the report is an increase in major retailers looking to locate their distribution points near rail connections. One factor thought to be driving this move is the growing importance of the CSR agenda for all commercial companies.