Industrial Market Review

Q2 Industrial Market Pulse South Coast

Signals are mixed in the South Coast industrial market at present, with demand being hampered, not by Brexit uncertainty, but by a residual and well-documented lack of stock. Take-up in Q2, high at 680,316 sq ft, was dominated by two significant deals at Dunsbury Hill and Voyager Park, and the long-term trend will remain restricted, with pre-lets the only opportunity for large occupiers.

In this issue:

Enquiries fall due to Brexit uncertainty and residual lack of stock

• Enquiries received in Q2 2016 totalled 116, a decrease of 13 on the previous quarter and a decrease of 32 year-on-year.

The majority of this fall was in 10,000 sq ft plus requirements, however, on a more positive note, we have seen an increase in enquiries for smaller units, driven by start-up businesses, satellite facilities, parcel operators and small distribution hubs. 

The enquiry level has been down throughout 2016 for larger units, due in the short term to Brexit uncertainty and in the longer term to a well-documented shortage of stock. As an example of this, we are aware of a distribution occupier looking for 300,000 sq ft close to Southampton Docks, with the largest void in their search area a 125,000 sq ft building that is not available for 3-6 months.  

Strong Q2 take-up dominated by two transactions

• There was 680,316 sq ft of take up in the South Coast region in Q2 2016, an increase of 73% from 392,970 sq ft in the previous quarter.

• There was also an increase in take-up seen in the longer term, with an uptick of 62.64% from 426,161 sq ft seen in Q2 2015. 

• The large increase in take-up for the quarter was due to two significant deals – Dunsbury Hill and Voyager Park.

Moving forward, a lack of good quality secondary stock that meets occupier expectations and minimal speculative development are making pre-lets the only option for large units. Smaller tenants are increasingly shelving requirements due to a lack of availability across all size ranges and renewing their existing leases. 

Speculative development and Hounsdown availability leads to short term increase of supply

• South Coast industrial availability stood at 2,124,487 sq ft at the end of Q2, a 10.05% increase on the previous quarter.

• In the longer term, this also demonstrated an increase of 22.37% on the 1,649,291 sq ft available at the end of Q2 in the previous year.

Of the stock available, 19% is prime – significantly up from 4% in Q2 2015 and 10% in Q2 2014. This is due in part to speculative development taking place, however, it is somewhat skewed by the availability of Hounsdown, a 125,000 sq ft building that will undergo full refurbishment to prime space upon vacation. 

Industrial development on the South Coast

Evander Developments is expected to commence development of three units of 40,000, 50,000 and 117,000 sq ft in Q3 at South Central, Nursling.

Mountpark has applied for planning for development on the 27 acres they acquired in 2015 near Southampton International Airport, Eastleigh. A decision is expected in Q3 and development likely to start in late 2016/early 2017. 

Dunsbury Business Park, just off J3 of the A3M at Havant, is poised to attract its next occupier following the success of the pre-letting to FatFace, who’s new distribution hub is due for completion in November 2016. The highway access and estate road is finished and B1/B2/B8 units from 20,000 sq ft to 200,000 sq ft can be accommodated.

An eight acre site at Merlin Park in Portsmouth is ready for development with a planning application in progress to build six units of between 9,150 and 48,200 sq ft which could be available as early as next summer.

The South Coast is already seeing limited speculative development taking place and although it is too early to say definitively what impact Brexit will have on this, early indications are that occupier demand is holding up so we expect it to continue.

Significant occupational transactions


Size (sq ft)


Rent (per sq ft)


Voyager South, Portsmouth


Roxhill Developments



New build (pre-let)

Dunsbury Hill, Portsmouth

80,000 (with extension option)

Portsmouth City Council



New build (pre-let)

3 and 4 Pioneer Park, Portsmouth



Travis Perkins


New build (speculative)

Unit 1a Chandlers Park


UK independent property
Flip Out 


Fully refurbished 

Unit 5 Mauretania Road


CBRE Global

Southampton City Council


Fully refurbished

Rents remain stable

There has been no evidence of rental values (prime or secondary) being affected by the recent Brexit vote. In some cases, tenants have attempted to renegotiate terms, but landlords have been able to hold firm due to the lack of available space.

In the longer term, tenants have typically accepted that they will receive shorter rent free periods and be required to commit to longer term leases, particularly on refurbished/new builds.

Investment market overview

Capital values to owner occupiers remain unchanged, however, investment yields have moved out marginally in non-prime stock as buyers are monitoring the economic climate. 

Local authorities and property companies are still very active and ‎open to good long-term opportunities as they arise.

Secondary assets are likely to be subject to price adjustments while the values of prime, well-located properties let on long leases will hold up.

Key investment deals

Westgate Centre, Abbey Park Industrial Estate, was acquired by a local property company for £2,670,000 against a quoting level of £2,175,000. The property comprised a terrace of three warehouse units let to three tenants at a passing rent of £184,104 per annum. 

Peter Road Industrial Estate, Lancing, was acquired by Rockspring (Caisson) for £3,900,000. The estate comprised 14 units with an AWULT of 5.20 years.

The forward funding of Cobham Gate Business Park was acquired by Tritax for £10,300,000, reflecting a net initial yield of c.5.50%. The property comprised a purpose- built parcel distribution facility let to GeoPost UK Ltd for 25 years.

Want more information about this Snapshot?

Southampton, Adrian Whitfield, industrial agency
Adrian Whitfield

023 8071 3073

Email me


Contact us now

Adrian Whitfield
Director - Industrial

023 8071 3073

How can we help?