Industrial take-up improves
Shortages of prime industrial space could mean that speculative development restarts in some areas of the UK as soon as the end of 2010, says Lambert Smith Hampton in new research published today.
LSH’s National Industrial and Distribution Report 2010 says that there were early signs of recovery in the occupational market during the second half of 2009 as take-up rose 10% from the previous year’s level. Take-up was dominated by large deals, with industrial units above 100,000 sq ft accounting for 23% of all industrial transactions.
“Looking ahead, take-up is expected to improve further as the economic recovery gathers momentum – which in certain sectors and areas, where supply of good-quality stock is in short supply, could lead to a rent bounce in the short to medium term,” LSH says.
Michael Alderton, head of LSH’s Industrial and Logistics division, notes: “Our findings are certainly encouraging and we are starting to see real improvements in the industrial sector; however, there is still a huge oversupply of second-hand space in the market as inefficient businesses continue to suffer. This, combined with new space, has pushed overall availability up to 320m sq ft, an increase of 22% on the end-2008 level.”
Demand has come mainly from the retail sector, as major retailers and supermarket chains have continued to refine their supply chains in a very competitive environment. Waste and recycling has also emerged as a major sector demanding industrial space.
The report also highlights the resilience of the industrial investment market in comparison with other sectors, with total return on investment at 3.82%, compared with a 2.18% all-property average.
