The continued shortage of industrial space in the South West has resulted in rents for large units experiencing a year-on-year increase of almost 10 per cent – the second highest figure in the UK.
The Autumn Industrial & Logistics Barometer from commercial property specialist Colliers International shows that the North East has seen the highest annual rent change of any region for Grade A units of over 100,000 sq ft at 17.6 per cent, followed by the South West at 9.6 per cent.
This compares with four – the East and West Midlands, Scotland and Northern Ireland – where rents have remained static at 0 per cent.
The research also shows that the availability of large units in the South West has fallen by 55 per cent over the last ten years. Nonetheless this is the second lowest figure of any region, with an average fall of 71 per cent across the country over the last decade.
Wales (down 85 per cent), the North East (76 per cent), the South East and West Midlands (both 75 per cent) are the worst affected.
Tom Watkins, associate director in the Industrial & Logistics team in the South West office of Colliers International, says a combination of strong demand driven by e-commerce and limited speculative development is contributing to the strong annual rental growth figures in the region.
“The fundamentals remain strong in the South West and developers have recognised that low vacancy rates and high rental growth are a winning combination, with the likes of Trebor Developments, St. Modwen and Barberry Group now developing speculatively in our region,” he said.
“Meanwhile across the Bristol Channel in South Wales, the market has historically been less buoyant, but the imminent abolition of the Severn Bridge tolls there has the potential to be transformative in the months and years to come.”
Colliers’ Industrial & Logistics Barometer shows that nationally, retailers and wholesalers continue to represent the largest proportion of deals, accounting for 53 percent (10.6 million sq ft) of transactions completed so far this year, which compares to 43 per cent in the same period last year (Q1 to Q3 2017). Third party logistics and transportation was the next most active sector, accounting for 24 per cent, followed by manufacturing at 18 per cent.
Tom Watkins said: “With the exponential growth in online shopping, the number of retailers which have requirements for industrial space continues to grow, and we expect this trend to continue.”