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News Release

Bristol

Tenants Rule South West Industrial Market in Absence of Much Needed Large Scale Development

Oversupply of poor quality stock means region is still a “tenants’ market”according to Jones Lang LaSalle


Bristol, 4th January, 2012 - Tenants still hold the upper hand when it comes to the South West’s industrial market, say experts.

The latest UK Industrial Trends report from international Jones Long LaSalle highlights a mixed 2011 for the region which saw some 4.3 million sq ft of industrial floorspace taken up in the first nine months of the year.

“However, from seeing initially encouraging enquiry levels at the start of 2011, those numbers levelled off somewhat in the light of poor consumer confidence,” said Paul Baker, Director in Jones Lang LaSalle’s South West National Industrial & Logistics team.

“It remains a tenants’ market with occupiers continuing to command significant incentive packages and flexible lease terms, especially in secondary locations where there is an oversupply of poor quality stock.”

Mr Baker said that the supply of good quality second hand stock and new space remained “particularly low” in the absence of any large scale development and that where supply was tight there was some evidence of headline rental growth.

“Interest from the trade counter sector started to pick up in the last quarter of 2011,” he added. “This has prompted IM Properties to speculatively build out the 7 trade units at the Longwell Green Trade Park in Bristol where occupiers have already been identified for two units prior to construction.”

According to the Jones Lang LaSalle research report, which looks at how each UK region’s industrial markets are performing, the South West has three speculative industrial schemes being built or completed in the region – higher than anywhere else in England outside London or the South East – but that those developments were all under 100,000 sq ft.

Many English regions currently have no speculative development taking place whatsoever, including East and West Midlands, the North East and East Anglia.

Paul Baker said: “Against the backdrop of the on-going slowdown in global economic growth and the continuing Eurozone debt crisis, occupier demand is likely to remain relatively subdued, although certain sectors still have active requirements and lease events will trigger take-up in other cases.”

Nationally total industrial take-up, which increased in 2010, fell back in each of the first three quarters of 2011. In Q3 total take-up fell by 0.6 per cent on Q2, following a 1.3 per cent decline in Q2 compared to Q1.