Industrial and logistics take-up hits five year high

4 April 2011

The amount of industrial space acquired in 2010 increased by 18.5% on the previous year to 101.2m sq ft – reaching a five year high. Increased demand was focussed on prime space yet, due to a lack of speculative development in previous years, grade A space was limited and quickly absorbed. Consequently, quality second-hand space accounted for 80% of take-up in 2010.

These findings come from the latest research report, National Industrial and Distribution Report 2011, published by national commercial property consultancy, Lambert Smith Hampton (LSH).

Adrian Whitfield, Director in LSH’s South Coast Industrial & Logistics team, commented: “As we progress through 2011 it is unlikely that sufficient prime space will be available to meet the increased demand in the market. Developers have already responded to this by becoming active in strategic land buying throughout the year, with an expected return to speculative development in late 2011/early 2012, where demand is strong and space shortage most acute.”

Key areas where the shortage of supply is likely to be greatest include the East Midlands, Eastern Region, Greater London and the South East.

Despite demand reaching a five year high, availability rose to 372m sq ft across the UK, an increase of 17% on 2009. This figure gives a distorted impression, as much of the stock returning to the market is obsolete, lower quality and unwanted stock.

Jerry Vigus, Director, added: “The South Coast has experienced a good level of occupier activity in the last 12 months, with a number of high profile transactions taking place. In addition to the larger lettings there has been a consistent level of take-up throughout the year for smaller units. This has led to a number of estates built in the last five years being fully let or sold, including Segensworth Business Centre and Own Your Own in Portsmouth.”

Robin Dickens, Director, concluded: “Due to the lack of availability, notably for bigger quality units along the M27 corridor, take-up rates for 2011 are likely to be lower than 2010; the last remaining new unit of over 50 000 sq ft at Trilogy, Segensworth off Junction 9, has now been let to Nampak Healthcare on behalf of SEGRO. Rents will remain static for the next 12 months but incentives and rent free periods will reduce. The opening of the Hindhead Tunnel on the A3 next year will have a positive impact for logistics companies, particularly in Portsmouth and South East Hampshire.”

For further information:

Contact: Lambert Smith Hampton
Web: www.lsh.co.uk