Large industrial unit rents ‘set to soar’ as supply shrinks
- Credit: Jaynic
A “chronic” lack of industrial space is set to lead to soaring rents in the East of England, according to a commercial agent.
Savills’ latest Big Shed Briefing shows take-up of industrial space, comprising units of 100,000sq ft or more, was just 470,000sq ft in 2018 – an 83% year-on-year decrease – due to a lack of supply in the region.
Even with the delivery of 353,732sq ft of speculative space at Suffolk Park in Bury St Edmunds, the total supply of units of more than 100,000sq ft stands at just 861,833sq ft across five separate buildings, it said.
Savills believes rents are likely to increase by as much as 10% on existing good quality stock.
Key deals for the region in 2018 included online retailer Yours Clothing which took 127,470sq ft at Newcombe House in Peterborough and Sealey Professional Tools, which purchased a seven acre site to build a 110,000sq ft unit at Suffolk Park at Bury St Edmunds.
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The largest transaction was LDH Ladoria’s purchase of a site at Eastern Gateway at Ipswich, where Panattoni is constructing a 230,000sq ft warehouse.
William Rose, director in the business space team at Savills Peterborough, said: “At present take-up across the East of England is being thwarted by an acute lack of stock, yet we are aware of a number of occupiers who are interested in taking space in the region.
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“There remains confidence in the market as proven with the number of smaller speculative units that came out of the ground in 2018 and we are positive that further development announcements are soon to follow.”
In contrast, activity for smaller units in the East of England remains strong, said Savills.
“Currently the industrial market remains propped up by smaller scale transactions but we believe that this is likely to shift over the next couple of years as development activity resumes,” said Mr Rose.