Haslams’ Industrial Property Snapshot - Winter 2017: Records tumble

The industrial market in the Thames Valley since my last note in The Business Magazine in the summer continues to outperform, writes Neil Seager, partner at Haslams Chartered Surveyors.

Notable industrial lettings in the region since the summer include:

• SAS International signing on a 44,000 sq ft pre-let at Suttons Business Park, Reading.
• DHL agreeing a pre-let of 100,000 sq ft at Exton’s Island Road site.
• Argos leasing Unit B Island Road (73,000 sq ft) for a returns and delivery centre.
• Volvo Cars and Trucks leasing 12,500 sqft and 30,000 sq ft at Prosper Park and Worton Grange respectively.
• Panther Warehousing leasing 35,000 sq ft at 1 Eastern Road, Bracknell.

There are also a number of lettings which are close to going through and will add to what we predict will result in 2017 being one of the highest ever recorded for take up in this sector in this region. Rents unsurprisingly have hit record levels with the historic psychological £10 per sq ft barrier now a distant memory.

What does this all mean? Well it means that occupier’s choice is narrowing to a very small number of units across most size ranges. Indeed, in some size ranges there is no choice. The reasons for this spike in demand are well documented from the growth of e-tailing to the positive impact on manufacturing as a result of the weakened pound. When the market wobbled around the time of Brexit we were all told that the best barometer of business performancce was the FTSE 250. Unlike the FTSE 100 it was more UK focused. Readers will be interested to note that on Friday, November 3 the FTSE 250 reached a record closing high. You can draw your own general conclusions from this news. The industrial property market reflects this positivity in the stock market and has the resilience in it to withstand a slowdown unlike the other property sectors.

Investors are certainly taking this view with the aforementioned DHL unit rumoured to be selling to Equities Property Fund, a South African REIT for £29 million which reflects a circa net initial yield of 4.25%. This yield would be a UK record for an industrial property forward funding transaction.

For further advice on the industrial property market visit - haslams.co.uk