The South East is highlighted as the region with the highest number of speculative developments in the UK and a key driving force of the national economy in a major report published by Lambert Smith Hampton (LSH).
LSH’s national Industrial and Logistics report, issued today (Wednesday, March 21), details how the area has the highest volume of small and medium units speculatively under construction of any UK region.
The report shows record take-up in the South of mid-box units – those between 50,000 and 100,000 sq ft – with a 37% increase in 2017 compared to 2016, and a 31% increase on the five-year average. Take-up of smaller units (under 50,000 sq ft), is also up, rising 20% in 2017 compared to 2016.
The take-up across both size brackets was fuelled by a number of major speculative developments, including the £30m South Central development at Nursling – where John Lewis has pre-let one of the three units – Solent Airport at Daedalus, Lee-on-the-Solent, Alpha Park at Chandlers Ford, and Harts Farm Way in Havant.
Jerry Vigus, Director, Industrial and Logistics for the South Coast office of LSH, said: “The South is undoubtedly a major driving force for the national economy and the figures published today confirm this.
“2017 was nothing short of spectacular in the take-up of industrial space across the region. The fact that a large proportion of development is speculative is indicative of the confidence in the market. The South Coast’s strong showing in this national report underlines what our agents are hearing – that the uncertainty of Brexit has failed to have any tangible impact on demand.”
The report finds that overall take-up across the region is up by 10% year-on-year at 11.2million sq ft. It also highlighted that the supply of prime Grade A space is on the up, with a 36% year-on-year increase that includes a 61% increase in logistics space (units over 100,000 sq ft).
The growing demand across the South has resulted in prime headline rents increasing to £9.50 per sq ft. Rents could increase to £10.00 per sq ft in 2018 as the newly-developed space is taken up and supply falls.
Nationally, LSH’s report found a record year for investment demand across the UK, with 540 separate deals, up 51% on 2016 and 39% above the previous record year in 2014. Appetite for quality facilities showed little sign of abating nationally, with grade A space accounting for 30% of UK take-up, the second highest proportion on record after 2016. LSH anticipates at least 7.3million sq ft worth of units above 50,000 sq ft will come forward speculatively across the UK in 2018, compared with only 5.9million sq ft of speculative starts in 2017.
Lambert Smith Hampton, with offices in Fareham and Southampton, is a multi-award-winning commercial property specialist and a leader on the South Coast in the industrial property, office space, retail and investment markets.
To see the full report visit www.lsh.co.uk