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CARDIFF, March 5th, 2018 - A growing lack of high quality business premises is threatening jobs and economic growth in Wales, according to leading property consultancy JLL.
Whilst Cardiff city centre is enjoying an impressive urban renaissance, with developments such as Central Square and Capital Quarter delivering prime Grade A space and major lettings, there is little activity on the outskirts of the Welsh capital or in and around the neighbouring cities of Newport and Swansea.
Without far greater availability of commercial floor space, the Welsh economy risks slowing.
That is the warning outlined in JLL’s South Wales Report, which is being launched at the SWALEC Stadium tomorrow (Tuesday 6 March 2018 – details below).
The lack of supply applies as much to industrial space, such as manufacturing facilities, warehousing and distribution centres, as it does to office space.
Despite the political uncertainties of Brexit, and the introduction this year of the new Land Transaction Tax, which will replace stamp duty in Wales, industrial take up remains strong at 4% higher than the previous year. However, supply is not keeping pace with demand and stock levels at the end of 2017 were 18% down on the previous year.
Chris Sutton, lead director at JLL’s Cardiff office said:
“Whether it’s warehouses or offices, Grade A space attracts Grade A occupiers – bringing high quality jobs and investment. And it doesn’t have to be a major PLC – increasingly niche, small start-ups in everything from tech and digital to life sciences and engineering are looking for first class space to deliver quality of life and attract the right staff.
“But currently demand is far outstripping supply. And the lack of available space in Wales is not only impacting our ability to attract prime employers, it could also threaten the retention of existing occupiers looking to upgrade their premises.”
The recent CAF, Sharp Clinical and AluK deals in the industrial sector illustrate the strength and confidence of the existing industrial base in South Wales. The continued rise of e-commerce and associated growth of ‘last mile’ urban logistics and the ‘just in time’ economy mean this demand will continue to grow. Yet as things stand, development remains slow.
The 165,000 sq ft ‘build to suit’ project for Spanish train locomotive manufacturer CAF at Celtic Business Park again illustrates this. The removal of the tolls on the Severn Bridges is expected to see increased demand from distribution and logistics firms who may also generate new build projects due to their precise building requirements.
Central Cardiff, by contrast, is the only location in Wales currently delivering large-scale speculative development. There is a need for readily developable strategic employment sites, not just within the Welsh capital, but beyond.
JLL has outlined ways government can help unlock sites and space, such as simplifying the planning process and using devolved taxes to incentivise investment and development rather than imposing additional cost on development. Facilitating infrastructure provision in order to prepare land for development can also make a significant difference by helping to remove uncertainty for developers and occupiers, as would viability gap funding and the removal of void rates on speculative development, to help push investments over the line.
Chris Sutton added:
“If we don’t address this growing lack of commercial space in Wales we will fail to attract inward investors and could even fail to retain the more footloose and agile businesses already in Wales, from manufacturing concerns to financial and professional services companies, who may choose to go elsewhere.
“We know that public finances are limited and energies and expertise are understandably focused on Brexit preparations, but swift action from the Welsh government in terms of planning and investment could help ensure Wales has the right property offer for business.”
JLL is launching its South Wales Report at a breakfast reception on Tuesday 6th March at 8.00amat the SWALEC Stadium, Cardiff, CF11 9XR
Speakers will cover the key deals in the commercial property market in South Wales for 2017, as well as looking ahead to some of the themes that will make an impact in 2018.For advance copies of the full report or to attend please email email@example.com
The report will be available on JLL’s website from 6pm today (Monday 5 March) at http://www.jll.co.uk/united-kingdom/en-gb/research
+44 (0)20 7493 4933