The South West saw industrial rents climb by nearly 7% last year, a rate that outpaced every other UK region except Greater London and Scotland, according to the latest research from Lambert Smith Hampton.
LSH’s Industrial and Logistics Market Report confirmed that while prime rents in Bristol remained stable at £8.00 per sq ft, other South West locations saw double digit growth, including Bournemouth and Plymouth which each saw a spike of 13% and 12% respectively, reflecting the acute lack of stock in these locations. Supply across the region as a whole ebbed to a new low last year, the report revealed, reducing by 9% on 2016 levels to stand at just 9.2m sq ft.
Conversely, availability of Grade A space leapt by 67% to reach 2.5m sq ft, its highest level since 2012. Having been one of the most tightly supplied regions, Grade A space in the South West now accounts for nearly a third (27%) of total availability, which is marginally ahead of the national level.
Commenting, LSH Bristol’s Industrial and Logistics surveyor Chris Williams said: “The robust performance of the South West industrial and logistics market over the last 12-24 months has not gone unnoticed, and the development community has reacted well with a significant amount of activity in the ‘big box’ (over 100,000 sq ft) category, which will help to ease supply issues.”
“In addition, we are seeing that some developers have taken the much-welcomed decision to build space speculatively. For example, a joint venture between Barberry and Richardsons has acquired around 40 acres in Bristol for speculative construction of over 500,000 sq ft mid-box units, with practical completion believed to be early 2019.”
Exeter
In Exeter, rents have improved by 6.7% to £8 per sq ft for prime industrial stock, with secondary rent rising to £6.50 per sq ft in quality locations.
“The strongest demand is from both local and national occupiers for freehold opportunities,” said LSH Industrial surveyor Zach Maiden. “The sale of the former Wheatons site on Marsh Barton to Travis Perkins for £3.29 m has proven that there is strong appetite for high profile sites in the city.”
Plymouth
Plymouth has experienced a drastic increase in buoyancy, the report stated, with a jump in demand for logistics space of around 50,000 sq ft, as companies look to the city due to lack of stock elsewhere in the region. While the Oceangate Development will increase supply for marine based occupiers, more traditional industrial stock is still in short supply and therefore landlords have attempted to sub-divide premises in order to cater for demand,” Maiden commented.
Demand for industrial space remained healthy last year, the report confirmed, with total take-up across the South West region of 7.1m sq ft. While this was down on 2016’s exceptional level of activity, it was comfortably ahead of the five-year annual average.