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Industrial take-up in the first quarter of 2012 falls to its lowest level since Q2 2009

Industrial take-up in the first quarter of 2012 falls to its lowest level since Q2 2009DTZ, part of UGL Services, has revealed the findings of its Property Times UK Industrial Q1 2012 report which covers the market for properties over 50,000 sq ft. The report found that compared with Q4 2011, industrial take-up in the first quarter of the year fell by 1.9m sq ft to 5.8m sq ft, the lowest quarterly level since Q2 2009 and almost 20% below the quarterly average. A fall in the number of transactions, from 60 to 49, largely accounted for the reduction.

•    UK industrial take-up fell to 5.8m sq ft in Q1 2012
•    Take-up in Wales reached 265,000 sq ft following Swansea letting
•    UK investment activity in the first quarter of the year fell by 60% to £620m.

Despite the fall in take-up, the lack of any sizeable space coming to the market resulted in availability falling by 1.5% to 165m sq ft, the sixth successive quarterly fall. Grade A stock did, however, fall disproportionately by 12.5% to 22m sq ft as prime take-up remained strong.

Rob Ladd, Director, Industrial agency in Cardiff, commented: “The amount of space transacted in the last quarter has reduced compared with the previous quarter, which saw slightly above average take-up. However, the decreasing stock of Grade A buildings will have impacted on the take-up figures. Manufacturing companies continue to account for a significant proportion of take-up, even if reduced on a quarter by quarter basis.”

In Wales, take-up for units over 50,000 sq ft consisted of just one grade B letting of 265,000 sq ft to an undisclosed tenant at Swansea Gate Business Park. Availability fell marginally during the quarter after little stock came to the market. Speedyhire’s 100,000 sq ft requirement for grade A space along the M4 is still unsatisfied, however with only 740,000 sq ft of prime space available across the whole region, this requirement could be in the market for some time.  
Rob Ladd continued: “Between 2006 and 2010 Wales experienced a raft of closures of well known and substantial businesses which resulted in over 13 million sq ft of good quality manufacturing space coming back to the market. In 2011 the amount and the rate of manufacturing closures in Wales reduced markedly. With no significant new industrial development being undertaken in South Wales for at least the last 4 or 5 years, there is now a shortage of good quality space.”

The rental outlook for the quarter was similar to Q4 2011 with levels remaining flat and agents reporting a hardening of incentives on smaller prime units. Rental growth forecasts have been revised down, largely due to downward revisions to the economic forecasts.  

Following a strong Q4 2011, investment activity fell by over 60% to £620m in Q1. The largest deal of the quarter was the £115m sale and leaseback of Tesco’s 930,000 sq ft distribution centre at Imperial Way in Reading to Legal & General.    

Martin Davis, Head of UK Research at DTZ, said: “Looking ahead, there is only 800,000 sq ft of speculative industrial development scheduled to complete in the next 12 months, which coupled with existing prime availability, means most regions only have one to two years of prime supply left at average take-up levels.” 

Posted by The Editor (wantspacegotspace) on 29th May 2012 (updated 09/04/2013)

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