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DEVON AND CORNWALL - INDUSTRIAL MARKET AUTUMN OVERVIEW

Mark Potter MRICS, Head of Vickery Holman’s Commercial Agency Department in Plymouth, comments, “In the Spring Review we reported caution within the commercial property market as a whole and it is safe to say this is still the case towards the end of 2011. However on a positive note, the current financial and economic climate ensures commercial property remains on the radar of both savvy Investors and Owner Occupiers. Vickery Holman continue to complete transactions within all sectors, including industrial.”

In respect of large industrial leasehold deals we are pleased to report the completion of a new 10 year lease to CDS (Superstores International) Ltd on both their existing office accommodation and additional warehouse space at Tamar House Estover, totalling in excess of 25,000 sq ft. A proactive stance by the Landlord (Plymouth City Council) included the subdivision of the main warehouse and so enabling a letting of part to CDS. The remaining 50,000 sq ft of warehouse space has achieved a good level of interest.

The Owner Occupier market continues to be active with financed businesses able to capitalise on opportunities including especially where added value can be achieved.  Vickery Holman, acting jointly with Maitlands Commercial, has recently exchanged contracts on Unit B10 on Phase 2 of the Plympton Park development off a quoting price equating to £95.00 per sq ft. The purchaser will look to carry out fit works to add value. A further 2 units (each circa 2,400 sq ft) are available immediately.

In the SME (Small to Medium Enterprises) sector we continue to see interest from expanding and new start up businesses.  Recent deals include; Unit W10 (730 sq ft) on Wallsend Industrial Estate was let in September 2011 on a 3 year FRI lease by Vickery Holman at a quoting rent of £4,650 per annum exclusive.  A proactive approach by all parties enabled a lease to be signed and completed within 5 working days from the tenant viewing the property.  Caroline Robins from Vickery Holman’s Agency Team adds, “This letting is a prime example of Landlords needing to consider quick transactions, flexible lease terms and incentives  - all key factors in achieving a successful letting.”  

With regards to freehold industrial transactions on second hand stock, we can report the sale of 2 Seymour Mews. A two storey detached commercial building of 368.3 sq m (3,962 sq ft) set within a site area of 0.05 hectares (0.11 acres) and was previously occupied by Asquith Supplies, a haberdashery product supplier.  Anthony Eke from Vickery Holman comments, “Being within an established residential area, our original thoughts during the marketing campaign was a residential development site opportunity.  However, such is the on-going difficulties in that market compared with the continued strength of the industrial owner occupier demand, the majority of interest came from commercial occupiers. Following protracted negotiations with the planning authority concerning a change of use, the sale completed off the guide price of £150,000 allowing the New Hope Training Centre to expand their existing operation and continue their community work.”

In Cornwall, despite a mixed national economic picture demand for industrial space has been strong over the last few months with a range of unit sizes and locations proving popular at varying times throughout the year. Earlier in the year Newquay and its surrounding estates saw a high level of interest from occupants looking to set up in time for the summer months with small to medium size units proving popular and achieving rents of around £9.00psf.

Later in the season more activity centred on mid and west Cornwall with Redruth, Pool and Camborne all gathering interest and units from 50 sq m (538 sq ft) to 500 sq m (5,382 sq ft) being let or sold throughout this period.  Vickery Holman have also successfully sold the entire first phase of newly constructed units at Treleigh Industrial Estate on behalf of Acorn Developments. The second phase is well underway with units ranging from 270 sq m (2,906 sq ft) to 720 sq m (7,750 sq ft). Indications are that there will be a good level of interest in these high quality ERDF Convergence funded units.
Longrock Industrial Estate in Penzance is proving as popular as always with 50 - 200 sq m units being let successfully at rents of around £8.00psf with larger units such as Unit 5 circa 2000 sq m (21,528 sq ft) being sold off an asking price of £895,000 to Trelawny Citreon. 

Notable current instructions include units currently available on Formal Business Park, Camborne where we have a series of 3 terraced warehouse/industrial units which can be split but total 1531 sq m (16,480 sq ft) with over 6m eaves height. The units can be split into three parts and offer direct access onto the A30 at the Treswithian roundabout.

In Exeter and the surrounding areas demand from SME occupiers looking for good value functional accommodation has been rejuvenated with an upturn in enquiry rates and transactions becoming apparent.  Occupiers continue to seek shorter lease lengths although they are beginning to see the current market as an opportunity to capitalise on more favourable terms and secure better units or try new locations.” 
Claire Cochrane of the Exeter office comments” The economic climate has ensured that nearly all businesses have continued to face uncertain times.  Staff and business changes have been common place and with constantly fluctuating accommodation requirements many occupiers have adopted a wait and see philosophy and postponed relocation decisions”.

The Exeter Team have recently agreed terms on small units at Cofton Road, Marsh Barton, Swan units at Sowton and Kingsmill in Cullompton.

Supply continues to outstrip demand and rents achieved vary significantly depending on quality, size and location. Headline rents of £7.00psf have been achieved on brand new high quality industrial units at Xpressway, Chudleigh with the first phase now fully occupied.  Construction of the Phase II is due to commence shortly delivering an additional 5,500 sq ft of high quality product in a good accessible location, adjacent to the A38. For early expressions of interest, consideration will be given to bespoke fit outs/designs (subject to terms and planning) and the units will be available to rent on new full repairing and insuring leases on flexible terms to be agreed at a quoting rent of £7.00 per sq ft for a shell specification.

There has also been an uplift in requirements for units in excess of 10,000 sq ft with our Exeter team experiencing positive feedback on a new instruction at Willand providing two detached warehouse buildings, totalling approximately 16,000 sq ft, benefiting from a large fenced yard area.
Clare Cochrane comments: “The market remains extremely challenging but it is also a very interesting time for the property sector; those willing to take a risk will find that there are some unique opportunities becoming available.”

In summary stock is still moving and it is also encouraging to see new speculative developments in the pipeline showing confidence is slowly returning to the market. 

Posted by The Editor (wantspacegotspace) on 14th November 2011 (updated 09/04/2013)

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