Industrial Market Review

South Coast Industrial Market Pulse Q4 2016

The South Coast industrial market has weathered the Brexit uncertainty storm robustly but remains hampered by the long term issue of a lack of good quality supply. Strong demand from occupiers is removing almost all prime stock from the market and pushing up rents. 

We are seeing the first significant level of speculative development occurring now and expect an increase in take-up as this much needed supply starts to service built up demand.

In this issue:

Demand increases despite supply issues and market uncertainty

• Take-up in the South Coast region was 439,490 sq ft in Q4 2016, an increase of 16.91% from the 375,929 sq ft seen in the previous quarter and an increase of 11.21% compared with Q4 in 2015.

• Despite a notable pause caused by political uncertainty in Q2 and Q3, 2016 as a whole saw 1,888,705 sq ft transacted in the region, just 11% below the 2,115,000 sq ft in the previous year. 

The main restriction to a higher take-up is the lack of supply that continues to be seen across the board in the region. The lack of freehold stock available was highlighted by the sale of 20,039 sq ft at Unit B Moorside Road, Winnall, Winchester, to AEL Properties for £85.00 per sq ft. 

We also saw further evidence of good quality secondary space rental growth with the letting of 11,515 sq ft by CBRE Global Investors to Belron UK Limited at Unit 4 Flanders Industrial Park, Hedge End, Southampton, at £8.00 per sq ft - a record headline rent on this estate. 

The most notable transactions during the quarter include a pre-Let of 47,500 sq ft by Mountpark and USAA Realco to Paul Murray PLC, which has prompted a revised planning application to enable the speculative development of a further 60,000 sq ft and 100,000 sq ft on this scheme, Colt International’s letting of 53,500 sq ft at Kenwood Business Park, Havant and Armorgard letting of 65,000 sq ft at Fareham Industrial Park. 

The number of industrial enquiries seen in Q4 remained strong at 112, which was consistent with the previous quarter. This provides confidence that the credentials remain resilient and robust in the South Coast industrial market. 

Our expectation is that the speculative development taking place will unlock requirements on the M27 corridor and 2017 will see a healthy level of take-up.

Significant occupational transactions


Size (sq ft)  Landlord 


Rent (per sq ft)
Units 14 - 16 Fareham Industrial Park, Fareham 


Standard Life Assurance Ltd 



Units 3, 7 and 8 Kenwood Business Park, Havant


Dunedin Property Asset Management 

Colt International Ltd 

Circa £6.00 

Mountpark, Wide Lane, Southampton (pre-let)


Mountpark Logistics EU Sarl/USAA Realco  Paul Murray PLC 


Unit 9 Kenwood Business Park, Havant 


Dunedin Property Asset Management



Unit B Moorside Road, Winchester 


VDC Properties Ltd 

AEL Properties (Southern) Ltd


Units 4 - 6 Fareham Trade Park, Gosport 


Oceanic Estates

Strong Room Self Storage


Unit 4 Flanders Industrial Estate, Hedge End 


CBRE Global Investors

Belron Ltd


Unit 6 The Nelson Centre, Portsmouth


Friends Life Limited

Cade Roofing and Building Services Ltd £7.50

Unit D1 Railway Triangle, Portsmouth 


Strathclyde Pension Fund

Visual Logistical Solutions Ltd


Easystands, Chandlers Ford Industrial Estate, Chandlers Ford 

Store Property Investments Ltd

Seymour Global Ltd

Stepped to £8.00
Unit 10 Fareham Industrial Park, Fareham


Standard Life Assurance Ltd

IPA Purchasing


Supply falls for third consecutive year

• South Coast industrial availability was 2,038,339 sq ft at the end of Q4 2016, a decrease of 1.33% from the previous quarter and of 5.52% from Q4 2015’s total of 2,157,325 sq ft.

• This is the third consecutive year that industrial availability on the South Coast has fallen, from approximately 2.4 million sq ft in 2014. 

The continuing fall in supply is significantly hampering the market. There is just 12 months industrial supply available, with 80% of this provided by grade B and C space.  

This lack of grade A space is being addressed in part with new units being built, such as 10,825 sq ft at Furness Business Centre, Havant,  24,030 sq ft at Station 1 Faraday Business Park, Solent Enterprise Zone , and 30,385 sq ft at Kites Croft, Titchfield.

Rents face continued upwards pressure due to lack of supply

Prime rents increased by 12% in 2016 to £9.25 per sq ft for mid-box units and secondary rents increased by 7% to £8.00 per sq ft in Southampton and £7.50 - £7.75 per sq ft in Portsmouth/Fareham.

Following significant rental growth over the past few years, the market remains favourable for landlords, with minimal voids seen on good quality multi-let industrial estates across the region. 

Lease terms continue to harden - the length of leases has pushed out to a 10 year minimum in some instances, with a typical nine month rent free period. There remains pressure on rent free periods for a five year term certain and these are now typically only three to four months long. 

Whilst this may have put a dampener on things for some occupiers, it has encouraged developers to go forward with plans for much-needed new schemes.

Development gathers pace

Bericote Properties, funded by Blackrock, has commenced construction of three units of 20,000, 45,000 and 80,000 sq ft at Alpha Park in Chandlers Ford, with a completion date of September 2017. The steel frames will be visible in February and we can report an encouraging level of interest in this scheme from occupiers.

Peel Logistics’ development of their South Central scheme, funded by Rockspring, is about to commence on site. This is a speculative development of three units of 40,000, 50,000 and 117,000 sq ft, each with secure yards, which will provide grade A space at the gateway to Southampton Port.

Mountpark Logistics, having secured a pre-let of 47,500 sq ft at Wide Lane, Southampton, is understood to have re-submitted a planning application to develop an additional 60,000 and 100,000 sq ft at the site on a speculative basis.

This wave of confidence extends along the M27, with the advent of long-anticipated new schemes. Canmoor and BA Pension Fund are planning units from 8,000 to 20,500 sq ft at Merlin Park and Pioneer Park, Portsmouth, together with build-to-suit opportunities on sites at Daedalus East, Solent Enterprise Zone, Velocity, Havant, and Berewood, Waterlooville.

Just launched onto the market is the major gateway site at Dunsbury Park, Havant, situated alongside the A3(M) between Leigh Park and J3 of the motorway, now poised to deliver a 50 acre site with outline planning consent for up to 62,000 sq m of B1/B2 and B8 uses. The development, by Portsmouth City Council, received matched LEP support to install its highway access and infrastructure. The first unit (80,000 sq ft) is complete and has been let to FatFace, which will take occupation during the spring.

Investment market review

2016 saw investment into the South Coast industrial market of approximately £240m. Key activity included CEG’s disposal of Anchorage Park to Paloma Capital for £6.2m, DTZIM’s acquisition of Railway Triangle, Portsmouth, for circa £31m, Cornerstone’s acquisition of Voyager Park, Portsmouth, for circa £12m and Tritax’s acquisition of Geopost, Bournemouth for circa £10m.

Stand out transactions for Q4 included a DHL sale and leaseback at Calmore Industrial Estate, Totton, for a figure considerably in excess of the quoting level of £5.775m, and the sale of Lower William Street Industrial Estate, Southampton, for north of £4m.

However, one of the most significant deals for the year was BlackRock’s funding of Alpha Park, Chandlers Ford, with Bericote Development. This scheme has a GDV of circa £20m and will consist of three units ranging from 20,000 to 84,000 sq ft, serving the much-starved demand for detached mid-box units in the region.

South Coast industrial property will continue to see robust interest from investors as and when opportunities become available.

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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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