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General
News and Deals
The speculative development of HQ style properties on business parks along the M4 corridor is spearheading growth in the region, according to Stuart Ramsey of GVA Grimley in Cardiff, speaking as GVA Grimley’s bi-annual Business Parks Review: Autumn 2007 is published.
The combined strength of demand for well located business park space, driven by mobility for business between Newport, Cardiff and Swansea, combined with a wide labour catchment area, has fuelled a number of successful speculative schemes.
80% of out-of-town construction in Wales is now being built speculative, with construction levels themselves also having risen 83% in the last six months to 42,150 sq m. Major contributors are Bocam Park in Bridgend (10,600 sq m) and St Mellons Business District in Cardiff (7,000 sq m ).
In Wales, rental growth currently stands at 1.2%. In the last six months, prime out-of-town rents in Cardiff increased from £167 psm to £170 psm, while remaining static at £156 in Newport and at £135 in Swansea.
Stuart Ramsey continues, “The speculative building of HQ properties in the region demonstrates developer confidence and position commercial investment. This is driving the success of our major M4 business parks. It is interesting to note that developers are also now opting for larger buildings which also offer future flexibility to subdivide into smaller, self-contained units; it is these smaller self contained units, often acquired freehold, which have been the backbone of the
Stuart cites developments such as the 2,601 sq m Guinevere House at Langstone Business Park, the 3,252 sq m CS3000 at Celtic Springs, 2,325 sq m at Raglan House at Cardiff Gate Business Park and Macob’s Green Meadow Springs as examples of how developers are moving the market forward.
Nationally, GVA Grimley indicates UK business parks are showing signs of recover, with take-up the highest for ten years – during the first half of 2007, take-up increased by 17% to 293,000 sq m well above the six-monthly average of 211,000 sq m, with the south east accounting for most of the occupational transactional activity.
The South Wales trend for speculative development is reflected nationally. The significant amount of space under construction continues in H1 2007 with 368,000 sq m of space under construction – two-thirds being developed speculatively. This is considerably higher than the six-monthly five-year average of 294,000 sq m.
National availability has risen by 3% over the past six months to 980,000 sq m, however due to the recent increase in space built, the vacancy rate has remained steady at 13.1% of total stock. The north / south variation is still significant with vacancy rates varying from 19% in the north east to 7.8% in the south west and 9.7% in south wales.