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Industrial & Logistics
Strong first half performance for South West industrial
Take-up figures for the first half of this year show continuing high activity in the South West industrial sector.
Following on from the record-breaking final quarter of 2020, when take-up of 734,765 sq ft was achieved in the region, the first half of this year has seen take up of 1,402,391 sq ft and 130.69 acres, transacted across 99 deals. This is 125 per cent ahead of the same period in 2020, which totalled 621,354 sq ft.
While these are impressive figures, it is worth noting that they are only 60 per cent of the way to the total take up for 2020, which equated to 2,327,207 sq ft following a strong finish to last year.
In addition, these figures for the first six months of this year from the Western branch of the Industrial Agents Society (IAS) should be viewed in the wider context of constrained activity immediately after the outbreak of the COVID-19 pandemic last year, when deals slowed down amid understandable caution on the part of many businesses.
There is a marked contrast between the second quarters of 2021 and 2020, with a 149 per cent increase in take up compared to this time last year. Whereas in Q2 2020 only 278,614 sq ft of take-up and no land were recorded across 27 deals, Q1 2021 saw 693,612 sq ft and 46.55 acres transacted across 51 deals. These were mainly multi-lets, but together with some mid-box and one larger transaction that bolsters the statistics.
The strength of the South West industrial market can also be seen in headline rents for the region across all size ranges.
Behind these statistics two themes can be identified. Firstly, the caution that was being shown by some companies a year ago has been replaced by active requirements for a range of industrial and logistics space across the South West, all of which are urgent and need to be satisfied as soon as possible. This is predominantly on the back of the e-commerce/online market and retailers acknowledging that the uplift in online retail is here to stay, so many of them need to quickly upgrade their supply chain to accommodate the increase volume of sales. Secondly, there has been a rise in speculative schemes, reflecting increasing confidence on the part of developers, albeit there will be a lag while these are being built, which will continue to put pressure on rents.
While Bristol has traditionally been a hotspot for industrial space – and continues to be so – we have also been seeing rapid success in other regional locations such as Bridgwater, Exeter, Gloucester and Swindon, that have all performed well in the first half of the year in their own right.
So far this year, Colliers has acted jointly on a number of disposals, notably the pre-letting of 107,660 sq ft of high-tech accommodation to Oxford Instruments Nanotechnology Tools at the Central Approach scheme being speculatively built by Trebor Developments and its partner Hillwood.
The strength of the South West industrial market can also be seen in headline rents for the region across all size ranges. During the first half of 2021 they have continued to rise as landlords have taken advantage of the supply and demand dynamic and therefore stayed steadfast in their position over the rents achieved. Any good quality, prime stock under 10,000 sq ft is now achieving in the region of £9.50–9.75 per sq ft. Mid box units are up at around £8.00–8.50 per sq ft and larger units over 100,000 sq ft are anywhere between £7.00–7.50 per sq ft, even up to the larger 300,000 + sq ft units.
Looking ahead to the second half of 2021, we anticipate that take up will continue to go from strength to strength, however this could be held back by the level of supply, which is currently running at sub 3.8 per cent of the total stock in the market, so we could see a further pinch on rents until stock levels are replenished by new speculative stock coming through – assuming these units are not let before practical completion!
