Positive signs in industrial market – C&W
There are some positive signs in the UK industrial property market, as prime rents are holding up and incentives for good-quality, well-located schemes are being withdrawn, says Cushman & Wakefield in its Q1 2010 update on the sector.
While investment has picked up, the occupier market is still finding there is a lack of prime space available, although second-hand space is still being released.
Take-up is “steadily improving”, C&W says, with around 5m sq ft transacted in Q1 2010, well above the previous year’s first-quarter level. “Distribution is expected to lead the way as retailers, looking for efficiency gains, improve their supply chains. Pre-lets are now also an increasingly encouraging feature as existing prime availability runs down,” the group notes.
In the short term, investment is expected to be the main driver of the industrial sector – demand in Q1 has already been strong and with a shortage of good-quality product, yields have sharpened with the national average yield now at 7.24%, C&W notes. Occupiers are expected to remain cautious but while most activity will relate to replacement of space, there will be a steady increase in new demand, the group predicts.
