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Steady
Demand for Industrial
Retailers continue to drive growth in the southwest and across the UK
in the industrial and distribution market, as the sector looks for new
warehouse space to cope with the flood of consumer goods from the Far
East. Competition within the sector and pressure from consumers to improve
sustainability performance is also driving innovation as efforts are
made to secure supply-chain efficiencies.
Demand for warehousing in Bristol remains strong with the regional distribution
market active, whilst inner Bristol has 49 acres allocated for warehouse
use until 2028. Out of town, however, there is an estimated 1.8m sq
ft of development in the pipeline for the next year at Avonmouth and
Severnside, where there is good access to the M4/M5 and substantial
tracts of land available. Total take up for 2007 amounted to a very
healthy 3,437,825 sq ft with 55.27 acres of land let or sold in a total
of 220 transactions. This compares with 2,065,000 sq ft in 205 transactions
in 2006, although the figure for 2007 is slightly distorted by an 850,000
sq ft pre-let to Constellation Europe.
ProLogis is developing approx 1 million sq ft of distribution space
at the former Rolls Royce factory in Filton. It is in the process of
completing 547,000 sq ft speculative build at Cabot Park, in Avonmouth,
with expected completion early in 2008. Gazeley has space for up to
870,000 sq ft remaining on a neighbouring and completing scheme known
as G. Park and has just completed the speculative development of two
units of 115,000 and 206,000 sq ft, which are quoting £5.95 psf.
Tom Gibbons, director at LSH’s Bristol office, commented: “Proximity
to the motorway remains key but the industry is increasingly on the
look out for sites with good access to the rail network and port connectivity.
This trend is set to continue as occupiers seek to avoid congestion
on the road network, escalating fuel costs and to reduce the carbon
footprint of their supply chain. Environmental standards for buildings
are also on the up, partially in response to new legislation, but also
as demand for ‘green sheds’ intensifies.”
LSH’s new National Industrial and Distribution Report 2008 reveals
the following:
*
2007 was a strong year for the industrial market with activity well
up on 2006 levels. Rental growth is forecast to slow this year, but
to improve from 2009 as the economy begins to improve.
* New locations are emerging where land prices are cheaper; there is
better availability of land and labour, good access to markets and a
more relaxed planning regime.
* New environmental legislation coming into effect from April predicted
to affect the capital value of property as occupiers begin to demand
more energy efficient buildings.
* Owners and occupiers of empty commercial properties became liable
for business rates on 1 April in a move Government expects to raise
an additional £1bn in revenue for treasury coffers. There are
fears this change to the tax regime could result in less speculative
development and a drop in investment interest in industrial developments.
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