Industrial Market Review

South Coast Industrial Market Pulse Q2 2017

Despite being constrained by a lack of available stock and experiencing a period of economic uncertainty, the South Coast industrial market held up well in Q2 2017, with take-up remaining relatively stable.

As prime stock on various schemes nears completion, take-up is likely to increase in H2. We are encouraged by the recent news that the economy has seen growth in the last quarter with both manufacturing and distribution sectors contributing to this. Increasingly, online retailers are looking for localised warehousing and distribution solutions near large cities like Portsmouth and Southampton in order to be closer to their customers and provide faster delivery times.

In this issue:

Enquiry level dips following record first quarter

Following a record quarter for new enquiries in Q1, there was a fall of 31% down to a more typical level of 126 in Q2.

This reflects a level 8% higher than in the same period last year and higher than any quarter in 2016.

A fall in the number of enquiries in the over 50,000 sq ft category was to be expected, following such a high number seen in the previous quarter. As speculative developments complete and companies are able to view finished products before committing to new premises, we expect enquiries to increase again for this size range.

Demand remains relatively consistent

Total take-up was 419,366 sq ft in Q2, a decrease of 3% from the previous quarter.

Although this represented a fall of 38% from Q2 2016’s take-up of 680,316 sq ft, two major transactions fell in that quarter which skewed the figure upwards. 

We expect prime take-up to increase, particularly towards the end of the year, as new developments, such as Alpha Park at Chandlers Ford, South Central at Nursling, Mountpark, Southampton and Hamilton Business Park at Hedge End, complete. A number of units are already under offer which will enhance 2017 take-up at the year end.

Take-up of secondary stock has fallen by 11.5% quarter-on-quarter and by 22% year-on-year. This is reflective of a lack of quality stock being available against a back drop of the significant amount of grade A space about to hit the market.

Take-up of new stock will boost market churn and the amount of secondary stock available will increase as a result, especially as landlords take the initiative to refurbish older stock.

Significant occupational transactions

Size (sq ft)



Rent (per sq ft)
Unit 9 Northarbour Road, Portsmouth
Portsmouth City Council  Stone Bridge United Ltd 5 years, 4 months rent free


Unit 23 Oriana Way, Nursling, Southampton 28,216


B&Q plc

10 years, 6 months rent free, 5 year tenant break


Station 1 Faraday, Daedalus Park, Lee-on-the-Solent  24,690

Fareham Borough Council Proptech Portsmouth Limited 15 years, 9 months rent free, 5 yearly reviews, 10 year tenant only break £9.00

Unit 3 Boyatt Wood Industrial Estate, Eastleigh  21,322


10 years, 18 months at 50% rent


Unit 25 Fareham Industrial Park, Gosport  15,438

Standard Life 


15 years, 9 months rent free, 5 yearly reviews, 10 year tenant only break £7.00

Unit 800 Ampress Park, Lymington 




10 years, 12 months at 50% rent, 5 year break


Supply increases for second quarter in a row

Availability was 2,233,161 sq ft in Q2, up from Q1 by 4% (90,997 sq ft) and up year-on-year by some 5% (108,674 sq ft).

Notably, Q2 saw an increase in prime stock coming to the market, for example, Unit 3 Trilogy in Fareham adding to the total availability of prime stock at 624,488 sq ft, up from Q1 by 17% (89,925 sq ft) and 58% year-on-year (229,028 sq ft). 

Trilogy is a modern development which forms part of the Segensworth North Industrial Estate located within half mile of junction 9 of the M27. Nearby major occupiers comprise a mix of international, UK based and local companies involved in manufacturing and high technology industry, logistics and distribution. These include Essentra, UK Mail, Coopervision, Snecma, Gemalto, TUV, Palmer & Harvey and Meggitt Avionics. Unit 3 Trilogy is a detached industrial warehouse unit comprising 42,760sqft with first floor offices and a secure yard. 

Going forward, we will witness a significant increase in the availability of prime stock as schemes such as Alpha Park, Chandlers Ford and Mountpark, Southampton complete and release some 350,000 sq ft into the market.
In Q2, secondary stock saw a decrease in availability, with the total standing at 1,608,673 sq ft, down year-on-year by 7% (120,354 sq ft). Nevertheless, secondary stock is where we see the bulk of the churn in the market, with units on popular estates such as Nursling Industrial Estate, Chandlers Ford Industrial Estate and Fareham Reach having a constant turnaround.

Rents are facing upward pressure

Rental levels have remained consistent through Q2, which arguably reflects the slight reduction in take-up. As availability reduces and the squeeze on supply continues, we expect a small increase on rental values across the region.

Freehold properties remain in hot demand and we would not be surprised to see capital values increase significantly across all size ranges and locations, as owner-occupiers in particular, search for their own properties, rather than paying increasing rents to landlords. An example is the recent sale of Wessex Gate, Winchester, to an owner occupier. This warehouse of 12,827 sq ft occupying a site of 1.1 acres achieved £100,000 above the guide price, following a short marketing period of high demand. 

Prime capital value (per sq ft)

Prime rent (per sq ft)

Secondary capital value (per sq ft)

Secondary rent (per sq ft)

Under 5,000 sq ft

Portsmouth and Havant

£130.00 - £135.00


£85.00 - £95.00 


Southampton and Eastleigh
£120.00 - £140.00 


£90.00 - £100.00 


Bournemouth and Poole
£130.00 - £150.00

£95.00 - £105.00


5,000 - 20,000 sq ft

Portsmouth and Havant

£125.00 - £135.00 


£70.00 - £80.00


Southampton and Eastleigh

£120.00 - £140.00

£80.00 - £95.00


Bournemouth and Poole

£115.00 - £120.00 


£85.00 - £95.00


Over 20,000 sq ft

Portsmouth and Havant

£120.00 - £130.00 


£70.00 - £80.00


Southampton and Eastleigh
£115.00 - £140.00 


£70.00 - £85.00


Bournemouth and Poole 

£110.00 - £120.00 


£65.00 - £75.00


Speculative development nears completion

As completion nears on Bericote Properties’ speculative scheme, Alpha Park at Chandlers Ford, funded by Blackrock, we are now able to fully appreciate the quality of space on offer. Yards and parking areas are now being laid, ready for completion in September 2017. Unit 1 is under offer and there is significant interest in the remaining units, 2 and 3 of 45,000 and 84,000 sq ft respectively.

At Peel Logistics’ new development at South Central Nursling, financed by Rockspring, the enabling highways works have completed, resulting in the widening of Test Lane. Construction has now commenced with delivery in Q1/Q2 2018. The development will provide three B8 logistics units of 40,000 sq ft, 50,000 sq ft and 117,000 sq ft, all with secure yards having access being adjacent to the M271; they will provide grade A accommodation at the gateway to the Docks.

Mountpark’s new scheme on the former Ford site, at Wide Lane, Eastleigh, is progressing well and Units 2 and 3 are now understood to have completed and will be reflected in Q3 take-up figures.

Hargreaves Properties’ development of its final site at the highly successful Hamilton Business Park, Hedge End, is programmed to complete in October 2017. Unit D2 will offer flexible industrial space, with accommodation available from 5,280 sq ft to 24,760 sq ft, capable of being let individually or combined.

At the eastern end of the M27 corridor, Dunsbury Park, Havant offers Design and Build build options from 20,000 sq ft opened.  Merlin Park in Portsmouth developed by Canmoor and BA Pension Fund has pressed the button to spec out seven units totally some 104,000 sq ft. On the Solent Enterprise Zone at Daedalus, Fareham Borough Council completed a letting of a new 24,690 sq ft speculative unit to Proptech Limited.

Investment market review

The investment market for South Coast industrial assets remains very strong, with a real depth of appetite. Over the course of Q2, we recorded six completed transactions and four, as at the time of writing, as being under offer. Activity was equally split between single-let and multi-let assets, the largest being Downlands Industrial Estate, Worthing, currently under offer comfortably in excess of the £20m (6.88% NIY) quoting level, with market sources indicating a figure of sub 6% NIY.

The majority of buyers were UK funds. One asset that captured particularly strong interest amongst a broad profile of prospective buyers was the Triton Centre, Romsey, which successfully sold for nearly £500,000 ahead of its £3,750,000 quoting level following a competitive bidding process. The South Coast industrial sector will continue to be competitive with strong interest amongst UK funds, property companies and local authorities. Prime yields have now compressed further to currently stand at sub 5%.

Over the course of Q2, a number of opportunities were brought forward, including Carvers Industrial Estate, Ringwood, at a quoting level of £5,570,000 reflecting a NIY of 6.25% - this is an attractive level that will no doubt be comfortably surpassed in this strong market.

Key investment deals

Triton Centre, Romsey: Multi-let estate with an AWULT of 5.60 years sold for c.6.00% NIY – ahead of its £3,750,000 (6.80% NIY) quoting level.

The Lodden Centre, Basingstoke: Multi-let estate totaling 113,062 sq ft with an AWULT of 3.50 years. Acquired by Colliers Capital for £11,900,000 (6.16% NIY) – comfortably in excess of the £9,750,000 (7.50% NIY) quoting level.

Trinity Court, Totton: Multi-let estate with an AWULT of 3.18 years currently under offer in excess of the £4,255,000 (6.00% NIY) quoting level.

Unit 3 Merston, Chichester Food Park: Single let to Natures Way Food for 25 years, sold off-market to a UK fund for £12,310,000 (5.70% NIY).

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Southampton, Adrian Whitfield, industrial agency
Adrian Whitfield

023 8071 3073

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Adrian Whitfield
Director - Industrial

023 8071 3073

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