Industrial Market Review

South Coast Industrial Market Pulse Q3 2018

A positive Q3 sets the tone for a strong end of year and overall performance for 2018 in the industrial market on the South Coast. The wave of grade A accommodation and attractive attributes that draws and retains businesses on the South Coast have resulted in positive take up figures this quarter.  


In this issue:

Enquiries on the rise

Coupled with the surge in transactional activity, we have also witnessed a rise in enquiry levels from 132 in Q2 to 150 in Q3. This is also up 12% when compared to the same quarter last year showing resilience in the market despite the perceived economic uncertainty.

The influx of enquiries was particularly focused on the sub-5000 sq ft and over 50,000 sq ft size brackets, when compared with the previous quarter, with continued appetite for space from the logistics warehouse sector, along with an increase in enquiries from the manufacturing sector.

Take up in Q3 recovers

As predicted, following the dip in take up last quarter, Q3 has recovered back up to the same level as this time last year and is on par with Q1 2018 totalling some 500,000 sq ft. The influx of new stock has been a significant contributing factor and has clearly satisfied some of the pent up demand.     

In addition the delivery of new developments has resulted in the release of good quality secondary stock, creating a buoyant market environment, where rents between prime and secondary are marginalised.

We are also aware of further grade A schemes which are already under offer and are due to complete next quarter including Unit 4 at Reliant Close, Chandlers Ford. We anticipate this will result in positive year-end figures and record take up levels for the South Coast.

The vital statistics have been summarised below:

 

Q3 2018 (sq ft)

Q2 2018 (sq ft)

% change

% change Year on Year

Total take up

501,071

241,655

107.35%

-0.65%

Prime take up

113,815

18,778

506.11

-50.10%

Secondary take up

387,256

222,877

73.75%

40.17%

Significant occupational transactions

Property

Size

Landlord

Tenant

Terms

Rent / Price (per sq ft)

Unit 42 Oriana Way, Nursling

62,003 sq ft

CBREGi

Gregory Distribution

10 year lease

£7.00

Unit 3 South Central, Southampton

46,080 sq ft

La Salle

John Lewis Partnership

15 year lease

£9.00

Industrial unit at Parklands Business Park

27,600 sq ft

 

Higham Furniture

Freehold Sale

 

Unit D2 Hamilton Business Park

24,760 sq ft

Hargreaves

DSV Air & Sea Limited

5 year lease

 

£9.75

 

Unit 4 Mauretania Road, Nursling

16,447 sq ft

CBREGi

Union Mart Ltd

10 year lese

£7.50

Unit 7 Merlin Park

12,270 sq ft

BA Pension Fund

Scott Cables

15 year lease

Confidential



Availability marginally increases

Further grade A stock has entered the South Coast market this quarter, although this is at a slower rate than we have witnessed in the last 2 quarters. These included Plot 3B Dunsbury Park totalling 38,000 sq ft, Phase 2 at Daedalus Park comprising 14,141 sq ft and a three-unit development at Mortimers Industrial Estate of 6,305 sq ft.

Availability of secondary stock has marginally increased when compared to last quarter with large units such as 36 Brunel Way, 9 Test Valley Business Park now on the market, with the latter already under offer. However year on year this still represents a decrease of circa 200,000 sq ft.

The vital statistics have been summarised below:

 

Q3 2018 (sq ft)

Q2 2018 (sq ft)

% change

% change Year on Year

Total stock

2,676,274

2,616,679

2.28%

21.64

Prime stock

1,134,210

1,138,217

-0.35%

150.53

Secondary stock

1,542,064

1,478,462

4.3%

-11.75

Investment Market Review

Approximately £55m of ‘South Coast Industrial’ assets traded during Q3 bringing total investment since the start of the year to circa £160m. UK Funds and Property Companies were the most active over the quarter. Prime yields remain under pressure and currently stand at 4.25%.

A number of Key transactions were concluded in Q3 which not only comprised Lineside Industrial Estate surpassing its quoting level of £19.17m (see Q2 Pulse for information) but included:

Hounsdown, Totton (rebranded to Optima 125): The property which comprised a vacant 125,000 sq ft refurbished distribution unit was sold to TH Real Estate for £18.85m.

Access Point: Unit 1 was sold on a 999 year lease and Unit 2 was let to Formaplex with a term certain of 8.36 years generating a current passing rent of £337,500. The freehold interest was acquired by BMO for £6,850,000 reflecting a NIY of 4.62%

Units 10-15 Petersfield Business Park: This Freehold multi-let trade counter estate with an AWULT to breaks of 7.30 years and generating a current passing rent of £203,592 was acquired for £3.80m reflecting a NIY of 4.99%. Quoting was £3.1m and 6.17% NIY.

Want more information about this Snapshot?

Southampton, Adrian Whitfield, industrial agency
Adrian Whitfield

023 8071 3073

Email me

Regions

Contact us now

Adrian Whitfield
Director - Industrial

023 8071 3073

How can we help?

Submit