Race for space as warehousing and industrial property market hots up
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For many years, Suffolk and Norfolk’s commercial property sector has looked with envy at the region’s major hotspot – Cambridgeshire’s Silicon Fen.
But a combination of the pandemic and Brexit – despite some dire effects on high street retail property and office markets – may have unleashed some unexpected dividends for other parts of the region. These include soaring demand for warehousing and logistics units and a growing appetite to take on manufacturing space.
Supply chain issues and lack of storage space reached a pitch at the height of the pandemic. Just-in-time delivery became a distant memory. It was partly a result of the seismic shocks the crisis caused – but also of red tape delays at newly-erected Brexit borders and shortages due to issues as diverse as climate change and, of course, the pandemic.
Now the economic ground is shifting. There’s a more pressing need to store commodities, goods and parts brought in through the region’s ports – from imported goods brought in through the container port of Felixstowe to commodities arriving at short sea ports such as Ipswich, King’s Lynn and Lowestoft.
There are also moves to shore up our food production sector – and shield us from shortages.
All of which has led to a race for space across the region as different parts of the economy start to recover – or shift into a higher gear.
Alec Smith, a director at Sentry – an Ipswich-based farm management business with national reach – said his firm was now exploring the possibility of using storage spaces on farms to stow other goods. As some – such as grain sheds – are only required for part of the year, there is scope. Talks with haulage and logistics firms has shown there is demand out there, he said, and now it is a question of marrying up the space they have with potential customers.
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Early talks suggest that there is demand for storage of lower value goods – such as charcoal and empty glass bottles, he said. “We have had probably half a dozen meetings with various logistics companies and people are very keen,” he said. “We have got probably a dozen sites in East Anglia on our books we are looking to put storage into.”
Two commercial property agents which have witnessed first-hand the changes in the market are independents which topped the table in 2021 for commercial property deals in their respective counties.
In Norfolk, Arnolds Keys took top spot in the Estates Gazette (EG) league table and in Suffolk it was Penn Commercial.
Arnolds Keys, based in Norwich, acted on 68 freehold and leasehold transactions totalling 281,375sq ft between January and December of last year. Over the same period, Penn Commercial, in Ipswich, also acted on 68 deals across all commercial sectors, equating to 464,515sq ft.
Arnolds Keys’ biggest deal last year was the disposal of 91,681sq ft of warehousing at the Shipdham Airfield Industrial Estate.
Managing partner Guy Gowing, who heads up the firm’s commercial property team, said 2021 proved to be a busy year for commercial property deals, particularly in the industrial and warehousing sector.
“This bodes well for the county’s economic recovery from the Covid pandemic. Increased commercial property deal activity invariably means more economic activity and the creation of more jobs – which can only be good news for Norfolk,” he said.
Food and hi-tech manufacturing were among the drivers, he said. Even high streets were seeing an uplift among small independents, and there was, surprisingly, some demand for office space. But the star performers in the county had been industrial and warehousing.
“Norfolk’s time has certainly arrived. While for many years we have looked enviably down the A11 to Cambridge, there is now considerable investment in the area by both existing companies and new arrivals to capitalise on the positive attributes of the area, such as enhanced connections by road, rail, air and sea, open space and low density of development compared to the home counties, the skilled pool of employees, and the availability of land and buildings for employment and housing.”
Vanessa Penn, managing director of Penn Commercial, admitted trading conditions in 2021 were “very challenging”, but in recent months the UK’s economy had grown in strength, driving confidence – and investment – in the commercial property markets, she said.
“We have been experiencing record demand for all types of logistics and distribution requirements – warehousing, fulfilment, lorry parking and container hard-standing amongst the main requests,” she said.
“A lack of stock and a number of key infrastructure priorities and developments across the region – including Sizewell C and ‘Freeport East’ – have resulted in Suffolk being a hub of activity for the warehousing and distribution sector – especially with our close proximity to the Port of Felixstowe, the UK’s largest container port.
“For instance, we have successfully let over 90% of Crane Park at Ipswich’s Ravenswood, just nine months from the initial instruction, with headline figures of £9.50/£10 per square foot being achieved for this new high-quality industrial / warehousing stock.
“We have also been seeing an increasing number of European logistics enquiries, as the UK’s more agile and flexible trade regime becomes ever-more attractive, post-Brexit.”
As a result, land prices are now pushing £700k plus per acre against a backdrop of a shortage of available stock, she said.
“Developers are having to be more open-minded in terms of the schemes that they are bringing forward. They are also looking to redevelop existing agricultural buildings for warehousing and are prepared to pay more than they would have done pre-pandemic, as the increases in rents and yields are now justifying the investment.
“We are seeking more enquiries for offices, both central and out-of-town, with companies now looking at future space requirements, as they plan their workplaces beyond Covid.
New sites coming forward in 2022 include Orwell Logistics Park, Claydon Campus, ‘The Hub at Ufford’, Park Farm Barns at Wherstead and a large site near Bury St Edmunds, as well as the Suffolk Central Stowmarket West office development scheme, she said.
EG counties league tables for 2021 commercial property transactions
Norfolk (space transacted in sq ft, number of deals)
1st: Arnolds Keys: 281,375, 68
2nd: Bidwells: 263,186, 50
3rd: Brown & Co: 232,338, 25
4th: Eddisons: 168,217, 6
5th: Roche: 102,493, 30
Penn Commercial: 464,51, 68
Carter Jonas: 194,944, 7
Avison Young: 182,008, 1
Fenn Wright: 173,015, 46
CBRE Ltd: 156,300, 2
Kemsley LLP: 713,616, 119
Fenn Wright: 588,060, 152
CBRE Ltd: 475,569, 11
Knight Frank LLP: 385,303, 5
Cushman & Wakefield: 366,876, 5