As we predicted at the start of 2012, the South Coast has struggled with the lack of large, quality industrial and warehouse units above 20,000 sq ft.
This has been, and will continue to be, both a challenge for the market and a conduit for ‘design & build’ pre-let transactions.
Despite what started as a slow year for the South Coast industrial and logistics market, a more encouraging level of occupier activity in the final two quarters has helped redress the balance in overall take-up.
2013: another challenging year
We foresee 2013 mirroring 2012 in many respects; the main challenge being the decreasing supply of larger, quality units.
As with the rest of the UK, there are a significant number of enquiries from parcel delivery firms linked to home delivery from internet sales. These occupiers are likely to be the most active, with their interest already logged against a number of opportunities along the M27 corridor.
Empty property rates
The government’s relaxation of empty property rates legislation from October 2013 is certainly a step in the right direction, but the latest proposal does not go far enough. The Chancellor’s Autumn Statement announced that a longer grace period for the payment of empty property rates on newly completed buildings will be introduced next year.
Only time will tell if this will give funds and developers the confidence to speculatively develop, but we would have hoped for relief to also applied to older properties, and the grace periods stretched much further. In addition, the relief doesn’t apply for another year – this is too late. Such measures need to be introduced earlier to give the economy a much-needed boost.
Schemes to watch in 2013
F&C REIT Asset Management has commenced marketing at Strategic Park, Hedge End, where a modern detached unit of 68,000 sq ft has already attracted interest. Aviva Investors will also commence marketing of 30,000 sq ft at Kites Croft, Segensworth, which will be available from September 2013. These will be two of the main schemes to watch in 2013, along with Voyager Park South and Merlin Park in Portsmouth.
We anticipate that the two tier market will grow further apart. We foresee prime stock continuing to be in strong demand with net rents even moving forward, whereas the secondary and tertiary estates will see heavily incentivised deals continue to be the norm.
Perseverance will be key
As the economy continues its volatile recovery, 2013 will be another testing year for the South Coast’s industrial and logistics market and perseverance will be key to achieving transactions. Against a backdrop of no new speculative development and fewer second hand units coming to market, the pressure on ‘design & build’ sites and vacant buildings will generate activity and build momentum.
To download our full Industrial Market Briefing for the South Coast, please click here.