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Research - 02/08/2016

Uncertainty presents opportunity

New research from Lambert Smith Hampton reveals that investment volume in UK industrial and logistics assets was relatively resilient during the second quarter of 2016, with £1.12bn of industrial assets changing hands, down 24% on the same quarter in 2015 but nonetheless 3% above the ten-year quarterly average.

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Key findings from the Q2 2016 edition of our Industrial Investment update report include:

  • Q2’s largest single asset deal was BNP REIM’s acquisition of Amazon’s new facility at Bardon Business Park for £126m representing a 4.5% NIY.
  • UK institutions were marginal net buyers of industrial. Despite being major net sellers of UK property overall, institutions were net buyers into industrial to the tune of £0.2bn in Q2. Overseas investors still remain the largest buyer of industrial, acquiring £0.4bn worth of assets.
  • Q2 saw aggressive prices paid, despite increased caution in the lead-up to the Referendum. This was true of both prime long income single let assets and short income opportunities with clear reversion potential.
  • Defensive stock will hold firm. Pricing for well-located prime stock is anticipated to be maintained at pre-Brexit levels in Q3. This was evidenced early in the quarter with LSH’s acquisition of Chrome 102, Minworth on behalf of Portsmouth City Council for 5.05% NIY.
  • Price adjustments create opportunity. Opportunistic investors may find discounts on pricing moving into Q3, particularly in the secondary and short income markets as some investors focus on more defensive opportunities before the overall picture becomes clearer later in the year.
For more information, contact Alex Carr, Philip Colman or Charlie How.

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