Space shortage drives South West industrial rents

By Anita Jaynes on September 09, 2016

A shortage of availability of warehouse and distribution space has resulted in continued growth in rental levels in the South West, despite a marginal slowdown in the market in recent months, according to latest data from the Bristol office of Colliers International.

Rents in both the prime and secondary markets have risen during the past 12 months, with average prime rents for big sheds (over 100,000 sq ft) increasing by 6% to reach the highest level since 2008, and average secondary rents for distribution warehouses going up by 16%.

Prime rents for big sheds in Swindon are now close to £6 per sq ft, while in Bristol they stand at £6.50 per sq ft. Secondary rents in Bristol are now achieving £5.50 per sq ft, reflecting considerable upward movement in the region in recent years resulting from a combination of shortage of new supply coupled with expansionary activity from occupiers keen to take advantage of the economic environment.

Tim Davies, head of the industrial and logistics team in the Bristol office of Colliers International, said: “Last year saw considerable activity in the industrial market in the South West and record growth in rents, with prime industrial rents in Bristol growing by +8.3 per cent in H1 2015 – one of the largest increases in Europe.

“2015 was a record year for take up. This year activity has dipped slightly, but this is reflection upon the paucity of stock rather than a reduction in occupier demand, and we have continued to witness rental growth. Limited availability of high quality warehouse and distribution space is driving this, and it seems inevitable that this imbalance between demand and supply will continue because of limited new supply and the surge in e-commerce with its intrinsic demands for extensive warehouse space.

“Not surprisingly, the market held its breath following the Brexit result, but so far there has been no impact on the activity levels. On the contrary there is evidence to suggest that July and August enquiry numbers were the highest to date.

“The market is particularly tight in Exeter, where transactions have been impacted by the shortage of available units. A business has to move from an existing premise in order to free up stock, but there are only limited options for other premises in which they can relocate.”

Pictured above: Tim Davies, Head of the industrial and logistics team in the Bristol office of Colliers International