Emerging Industrial Prime Markets in the South West

Posted by Colliers on 19th April 2023 -

Supply of warehouses in the South West, particularly those above 100,000 sq ft, is in short availability.

At the end of 2022 there was only 651,000 sq ft available across the region, a contraction of 80 per cent on the previous year’s figures. This feeds into why the region bucked the trend of new build occupation last year, as 80 per cent of new tenancies started in second-hand units, such as Hercules in Cribbs Causeway where 240,000 sq ft was let to DFS and 160,000 sq ft let to Gregory Distribution, while at Titan in Yate 255,000 sq ft was let to Graphic Packaging. 

Just under ten per cent of take-up last year was in purpose-built space for the occupier, and the remaining 11 per cent of tenants went into new, speculatively developed warehouses. 

While Panattoni is on site in Avonmouth building two units of 406,000 and 882,000 sq ft and St Modwen has committed to 342,000 sq ft in Chippenham. This combined with the immediately available 360,000 sq ft built by Mountpark last year, will replenish some supply into the market. However, there were also several other developers that were due to commit to speculative schemes, but these plans have now been put on hold due to the increased borrowing cost and the consequent yield expansion that has occurred over the past nine months. As a result, this has kept supply levels constrained across the region, and therefore holding headline rents across all size ranges.

 

The rise of Bridgwater, Gloucester, South Wales and Swindon

The imbalance between supply and demand has caused the rise of several emerging industrial markets in the South West, as a result these have now turned into prime locations, such as Swindon, Gloucester and Exeter

Occupiers demands from the South West have been evolving as well. With the growth of e-commerce and demand on supply chains resulting in many retailers considering a wider catchment area for their needs - as long as good transport links are available. Furthermore, labour is key and city locations such as Gloucester and Swindon provide a pool of skilled labour, which is another key requirement for occupiers as the manufacturing and logistics sector continues to develop and modernise.

Elsewhere, Bridgwater has been on the precipice of success for the last few years. It’s an established logistics and manufacturing location, and this is evidenced with the list of national occupiers such as Morrisons, Mulberry and Refresco, that has chosen this location as its home. Bridgwater Gateway on Junction 24 is one of the most deliverable sites in Somerset, and it has narrowly missed out on some exciting built to suit opportunities over the last couple of years, however there’s a few requirements focused on this part of the world, so watch this space.

According to the Industrial Agents Society, South Wales has had a positive start to the year with 550,000 sq ft already transacted over 64 deals, despite the limited supply of standing stock. Cardiff has particularly low availability at the larger end of the size bracket, and there’s limited development in the pipeline, so we may start to see that occupiers looking for 100,000 sq ft will be forced to consider space further west along the M4 towards Bridgend and Swansea, or east to Magor and Newport, which is another location to keep an eye on.

South-East Wales has been an established industrial location for a number of years, but it’s starting to experience its heyday, so much so, that it has become a strong contender for occupiers considering space in Avonmouth and Severnside. This was evidenced with the recent pre-let of 155,000 sq ft at Link 155 in Magor to Owens Transport, which is being currently built out by Cubex. As it stands, the only new build supply in the pipeline for over 100,000 sq ft is St Modwen Park in Newport, where they are building three units of 52,000 sq ft, 106,000 sq ft and 116,000 sq ft. Rents in this location, just over the bridge, are now almost equal to those being achieved in Avonmouth, so this market has come on leaps and bounds in the last couple of years.

Read article on Colliers website 

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