Industrial Market Review

Luton industrial and logistics market review

Luton and Dunstable has seen a strong start to 2014 but limited availability of industrial stock is likely to constrain take-up going forward.

You can download a PDF version of this market review, or to read and sign-up to receive updates from other UK centres, click here.

In this issue:

Increase in take-up for Luton industrial market

  • Q1 saw the strongest start to the year since 2008, with 212,000 sq ft of deals completed. 19 transactions culminated in 383,000 sq ft transacted in H1. Only four transactions have been over 20,000 sq ft.
  • The majority of take-up has been leasehold, with only 52,000 sq ft freehold, and these tended to be owner occupiers disposing of non-operational assets.
  • A lack of supply along the M1 corridor has forced occupiers to be more flexible with their requirements and this has led to a widening of search areas.
  • Six occupiers were new to Luton and all took units under 10,000 sq ft. More than 50% of take-up has been refurbished space.
  • Lease terms are firming up, especially on better quality accommodation. On refurbished units, six months rent-free is becoming more common for a five-year term, down from nine months last year.
  • 440,000 sq ft is currently offer - made up of 17 deals. This includes 90,000 sq ft at 12/13 Foster Avenue; three 60,000 sq ft units and four units of circa 30,000 sq ft. Encouragingly, six of these occupiers will be 'new to Luton'.
  • Assuming these all complete, we will surpass the 10 year average for the first time since 2007.
  • LSH has been involved in 89% of the transactions completed this year.

For an annual comparison of Luton industrial take-up, click here.

The market remains under supplied

  • Available supply currently sits at 1.15m sq ft which is broadly in-line with the end of 2013. However, this reduces to 760,000 sq ft when properties ‘under-offer’ are excluded.
  • Most size ranges are now under supplied, although there is still a cluster of available units around 10,000 sq ft.
  • Less than 20% of supply is refurbished.
  • Demand remains patchy, although a number of freehold requirements remain unsatisfied.
  • Prologis are due to complete construction of DC1 this month, a 310,108 sq ft speculatively built Distribution Centre in Dunstable.
  • Pending the completion of DC1, the largest available unit is currently A-C Portland Close, Houghton Regis (pictured), which totals 51,177 sq ft.
  • The investment market has been quite active with sales at Airport Executive Park and Bilton Way both completing this year. The latter was purchased by Henderson and is one of the largest estates within Dallow Road, with 47 units totalling 408,267 sq ft.
  • Following the purchase of Bilton Way last month, Henderson have already instructed the refurbishment of two of the vacant units, as part of an ongoing commitment to deliver refurbished product to the market.

For an annual comparison of Luton industrial supply by size, click here.

Looking forward...

  • Junction 10A improvements and completion of the inner ring road will improve access to south and central Luton ahead of work beginning on the expansion of London Luton Airport, which secured planning consent earlier this year.
  • Work on the A5-M1 Link, junction 11A and the Woodside Link is expected to start on-site early next year, for completion early 2017.
  • Supply is expected to remain constrained although more landlords are undertaking refurbishments to address the lack of quality accommodation.

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