South Coast Industrial Market Pulse Q1 2018

Reassuringly 2018 appears to demonstrate the signs of a healthy year with an increase in available space; presenting new opportunities for occupiers, strong overall take up figures; indicating the continued demand for industrial space on the South Coast, a consistently healthy level of enquiries and a record rent being achieved at Alpha Park, Chandlers Ford.

Enquiries Rise By 25%

Enquiries rose by 25% against last quarter. Whilst they did not reach record levels, it is encouraging that they increased to satisfy the trend of consistently high enquiries for Q1.

We have witnessed an increase in the larger requirement sizes, from 20,000 sq ft plus, which we attribute to the increase in prime stock, which is predominantly in the larger sizes of 40,000 plus.

14% Increase In Take-up

Q1 has seen a positive start to the year with an increase of approximately 14% in overall take up when compared with Q4 2017 and up approximately 4% when compared to the same period last year. As evidenced from the data, take up this quarter has primarily been for secondary stock. We anticipate this weighting to shift later in the year as we see these speculative units and pre-let units complete and tenants take occupation.

The vital statistics have been summarised below:

	Q1 2018 (sq ft)	Q4 2017 (sq ft)	% change	% change Year on Year
Total take up	450,627	394,005	14.37%	4.11%
Prime take up	79,406	143,514	-44.67%	3.72%
Secondary take up	371,221	250,491	48.2%	4.19%

South Coast Industrial Market Pulse Q1 2018 take up

Significant occupational transactions

	Size	Landlord	Tenant	Terms	Rent/Price (per sq ft)
Detached Factory, Moorside Road, Winchester	49,780 sq ft	La Salle	Apen Components Ltd	TBC	£5.75
Unit 2 Alpha Park, Chandlers Ford	44,868 sq ft	Blackrock	Charles Kendall Freight Ltd	10 yr lease	£10
Units 220-230 Fareham Reach, Gosport (LSH/HL)	38,000 sq ft	Britel Fund Trustees Limited	Ashford Colour Press	15 yr lease	£7.03
Unit 1 Mauretania Road, Nursling	21,633 sq ft	CBREGi	Aqua Pacific UK	5 yr lease	£8.25
Unit 1-3 Southmoor Lane, Havant	18,582 sq ft	Guinness Partnership Group	Monolution Holdings	Sale	£67.94
Unit 1 (Club Hangar) Solent Airport Daedalus	6,350	FBC	Bournemouth Avionics	6 yr lease	Confidential
Unit 2 (Club Hangar) Solent Airport, Daedalus	6,350	FBC	Bournemouth Avionics	6 yr lease	Confidential

Rise In Speculative Development

2017 saw a rise in new speculative development coming out of the ground both for speculative builds and units with pre-lets agreed, and there is more to come. New development in the region has risen significantly and as such, these sites are now either built, or are nearing completion. Notable new stock includes Units 4 and 7 at Mount Park totalling 173,890 sq ft and Units 1 & 2 South Central, Nursling totalling 155,970 sq ft.

Secondary stock availability has slightly declined however the year on year figure indicates this is being maintained at a relatively consistent level; a trend we anticipated to continue at the end of last year with tenants remaining in their current premises.

We note from our statistics that where there has been some change in tenant’s occupation is where business has suffered and occupiers have gone into administration. Notable stock which has come back to the market due to this factor includes Radial 27, Unit 3 Crompton Way and Brooklands Courtyard totalling 125,970 sq ft.

The vital statistics have been summarised below:

	Q1 2018 (sq ft)	Q4 2017 (sq ft)	% change	% change Year on Year
Total stock	2,433,300	2,293,412	6.1%	13.59
Prime stock	907,227	709,904	27.8%	69.71
Secondary stock	1,526,073	1,583,508	-3.63%	-5.07

South Coast Industrial Market Pulse Q1 2018 availability

Double Digits Reached

As predicted during the last quarter, we have reached double digit rents in the mid box sector, with a record rent of £10 psf achieved on the Charles Kendall letting at Alpha Park.

We expect this to begin a trend with landlords of prime stock competing on rents to increase rental tone further. This will in effect continue to marginalise the rent on secondary stock, as seen in the increased take-up and reduced availability.

Investment Market Review

It is with no surprise that the industrial sector along the South Coast continues to attract great interest from investors. Whilst we recorded ‘zero’ transactions over the course of Q1, investor appetite remains robust with active requirements targeting the region.

‘New to market’ included 29 & 30 Solent Industrial Estate Hedge End quoting £3.45m (6.75% NIY). The property, which comprises 39,397 sq ft across two buildings on a secure gated site, was let to CCF with a term certain of 3.20 years at a passing rent of £247,500.

Moving into Q2 we are aware of a number of opportunities being prepared for market. As has been widely reported, Industrial remains the darling sector. Prime yields along the South Coast stand at 4.5%