Industrial Market Review

Watford and Hemel Hempstead industrial and logistics review H1 2015

Low supply sees return to speculative development in Watford and Hemel Hempstead.

In this issue:

Take-up is rising

  • During the first half of 2015, take-up in Hemel Hempstead totalled 214,900 sq ft across eight transactions. The figure was significantly boosted by the assignment of the 129,233 sq ft Access 8 at Boundary Way to DHL. This is against just under 300,000 sq ft in 2014.
  • Q3 2015 in Hemel Hempstead looks set to be strong with a number of significant buildings under offer and expected to complete shortly. These include the 71,200 sq ft Century House on Maylands Avenue and the 65,342 sq ft Boundary Point.
  • In Watford, take-up during the first six months of 2015 totalled 212,851 sq ft in 15 transactions, compared with a total of 225,300 sq ft in 2014.
  • The Watford market has been dominated by a number of freehold transactions to owner occupiers. Gearhouse Broadcast agreed a new 15 year lease with a break at 10 for the 42,040 sq ft Greenhill Crescent, but over half the transactions were under 5,000 sq ft.

Availability continues to be a concern

  • In Hemel Hempstead, current availability is 265,700 sq ft including Century House and Boundary Point, which are under offer. This leaves only 129,000 sq ft of which the largest property is Unit B Hemel Gateway comprising 27,764 sq ft. This situation is unprecedented, which will hopefully lead to the return of speculative development very soon.
  • Schemes in the pipeline include Maylands Point, where Orchard Street Investment Management and Chancerygate are planning two buildings totalling 70,950 sq ft on a prominent Maylands Avenue site. Planning consent for a single warehouse unit at Bourne End Mills has recently been declined by Dacorum planners, but Albion Land are still promoting the site on a pre-let/pre-sale basis. Significantly, the HCA has bought Maylands Gateway, comprising 32.4 acres to the market, with bids due in early August 2015.
  • In Watford, current availability stands at 181,700 sq ft, including Unit 7 Imperial Park, which has recently exchanged an agreement for lease for 35,132 sq ft. This transaction confirms demand for quality stock. In addition, the first phase of employment land at Watford Health Campus is being brought forward with the new access road from Wiggenhall Road to Watford General Hospital. The first phase of development by Kier Property under their Trade City brand will comprise 12 units totalling 65,000 sq ft.

Looking forwards

  • There is now significant under supply across all size brackets but this is particularly acute under 10,000 sq ft. Rental growth is anticipated across all sectors in the order of 15% to 20%.
  • Trends include new leases being agreed for terms of ten years certain with significantly reduced incentives across all size brackets or possibly no incentives at all.

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