Demand for industrial commercial property along the South Coast remains steady despite challenging market conditions and uncertainty over Brexit, according to the latest Market Pulse from Lambert Smith Hampton (LSH).
LSH’s South Coast Industrial Pulse Q4 2018 report showed commercial property enquiries in the last quarter of the year were down slightly, at 133 compared to 150 in the previous quarter – but remained consistent with the last quarter of 2017.
There was a good level of enquiries for large industrial properties at 50,000 sq ft or more during the quarter, and a strong finish to 2018 saw a 14% increase in take-up of prime and secondary stock against the same quarter the previous year, with a total of 574,999 sq ft transacted.
These included significant deals at Mountpark in Southampton and Merlin Park in Portsmouth, where rents are hovering around the milestone £10 per sq ft mark.
Availability of property increased in Q4, notably at Hermitage Park in Havant, where 21,515 sq ft was on the market, and The Nelson Centre in Portsmouth, with 29,989 sq ft.
Adrian Whitfield, Director – Industrial at LSH’s south coast offices, said: “There is no denying that there are challenges ahead, but this is an encouraging insight – especially the increase in take-up of prime stock, which demonstrates confidence in the region with some large speculative schemes serving continued high demand.
“Due to wider economic factors, we expect take-up in the first half of 2019 to be lower than previous years – however, as we witnessed in 2016 following the Brexit referendum, we are confident that the market will rally to produce a strong finish to the last two quarters of 2019.”
The Pulse report noted significant activity in the investments market, with £75.4 million of south coast transactions in the final quarter of 2018 bringing the year’s total to approximately £231m.
A significant transaction was the £29.5m acquisition of Marchwood Power Station by CBRE Global Investors, for which LSH acted on behalf of the seller, Oceanic Estates.
Jerry Vigus, director – capital markets and industrial and logistics at LSH, said: “There remains a large amount of capital targeted at in the south coast as investors remain buoyed by the strong rental yields achieved in the region. Much of this activity was driven by multi-let estates where £145.7m was transacted throughout the year as investors proactively and competitively targeted this thriving sub-sector.”
The Q4 report was presented at a breakfast briefing hosted by LSH at The Spark at Solent University, Southampton, where LSH’s office and retail teams also took the opportunity to update guests on their south coast markets.