Categories: Press Release
At London Clancy’s recent New Year’s Reception, where over 80 delegates, investors, developers and professionals attended David Heda Head of Agency at London Clancy’s Southampton office gave a positive outlook to the current level of activity in the industrial, warehouse and office market across the south coast reviewing the 2018 take up.
David Heda commented
‘The big shed market has performed well over 2018 both nationally and regionally’.
Nationally, it has been reported that take-up of industrial & logistics space (units of 100,000 sq ft +) hit 16.4 million sq ft in the first half of 2018, a 25% increase on last year’s figure with demand again being underpinned by online retail activity with occupiers in the sector accounting for 28% of all transactions.
There has also been a good level of industrial take up in all locations across the M27 corridor.
On major new industrial developments Eastleigh and Chandlers Ford continues to demonstrate its key strategic importance as a location with strong occupier take up.
Paul Davies Freight has taken 40000 sq ft at newly completed unit 4 Reliant Close Chandler Ford at a reported rental of £9.67 sq ft and Charles Kendall have taken 45000 sq ft at Alpha Park Chandlers Ford Industrial Estate.
At Mountpark Eastleigh on phase 2, out of 4 units built only two remain available. American company PFS Web has taken 107500 sq ft as a fulfilment centre to serve their Heineken contract. PFS Web provides ecommerce and multichannel outsourcing solutions for global consumer brands, online retailers and branded manufacturers.
Matthew Clark has signed for the 67500 sq ft unit relocating from Hedge End.
At Hedge End off Junction 7 DFC Freight have taken a new unit of 24760 sq ft at Hamilton Business Park.
Likewise on Nursling industrial estate take up has been strong where Union Mart Ltd, a leading UK supplier of pressure washers have taken a 16,500 sq ft unit, Young Transport have taken 10 Oriana Way, a 61,000 sq ft unit and Gregory Distribution one of the largest privately owned transport companies in the UK, has taken 62,000 sq ft. to serve its contract with Hovis Bakeries.
SME’s continue to find it difficult to find alternative space however there has been some take up with industrial valve manufacturer Warren Morrison taking 8,000 sq ft at Tower Industrial Estate, Eastleigh and vending machine supplier Selecta UK Ltd taking 7,500 sq ft at unit 2.
Employment land remains acutely in short supply evidenced by the recent purchase by Kier Group of 3 acres of land at Solent Business Park Whitely for their logistic city brand reported to be at a price of circa £950000 per acre, the scheme will accommodate occupiers looking to lease units, from 10,000 sq ft to 60,000 sq ft.
At Adanac Park Oceanic Estates have established a planning consent for up to 400000 sq ft of B1 industrial space although were unable to secure B8 warehouse consent from Test Valley Borough Council.
Oceanic also have under construction their 31881 sq ft warehouse at Centenury Quay Woolston which benefits from deep water access.
At Chalcroft Business Park Burnett’s Lane Hedge End/Horton Heath our client’s have submitted a full planning application for a small unit scheme of 28000 sq ft and two larger units of 20000 and 25000 sq ft.
Industrial investment yields remain keen evidenced by the recent disposal of The Quadrangle Romsey a multi let industrial estate of 125000 sq ft which has been purchased by CBRE Global Investors on behalf of Hampshire County Council after a competitive bidding round reflecting a yield in the region of 4.5%
Threadneedle have purchased the freehold of Avalon warehouse complex, Parham Drive, Eastleigh providing approximately 110000 sq. ft. of space being offered on a new lease.
M&G Real Estate, have purchased phase 1 of the Mountpark scheme at Eastleigh let to Coopervision, Berensden and Paul Murray Cosmetics.
T.H Real Estate have acquired from Legal and General the 125,255 sq ft unit at Hounsdown Business Park, renamed Optima 125 which is now fully refurbished.
On offices, take up has been more encouraging over the first half of the year particularly in the city centre.
There has been more emphasis now on shared working facilities with a major new shared working facilities coming to the city centre at the start of year include Network a 12,500 sq ft of office space in the Marlands Shopping Centre aimed at digital and creative companies.
A new shared work space on Southampton’s High Street, offers 11,000 sq ft of co-working and office space..
On general take up there has been a 20% decrease in take up over 5,000 sq ft with approx. 50000 sq ft transacted last year, compared to just over 60,000 sq ft in 2017.
Good news story is the fully refurbished White Building of 50000 sq ft in Cumberland Place which is now virtually fully let.
MOSL has taken on a 4,825 sq ft office suite and joins an impressive list of tenants, including James Cowper, , Foot Anstey, Regis Bentley, Novum Law, Blue Arrow, Manpower and Barton Willmore.
The largest city centre transaction was the letting to Norwegian Cruise Line taking 17,263 sq ft at Mountbatten House.
A number of buildings are coming back into the market refurbished including;
1 Dorset Street – - 14700 sq ft
Imperial House Kings Park Road – 7900 sq ft
Oceana Commercial Road – 21500 sq ft
11 The Avenue - 13400 sq ft
With headline rents now ranging from £20-£22.50 sq ft
2019 will be a year of potential contrasts for the M3/M27 property markets as investors and occupiers react to the unfolding Brexit scenario and as set against the robust activity within the region over the last twelve months.
A cautious and slow start to the year is expected but that could accelerate into an exciting second half.
Clearly the outlook is uncertain, but that has been the position since 2016 and to-date there has been little direct impact of the current political situation on the commercial property market in our region.
It is anticipated that the underlying market fundamentals and trends will continue unaffected during 2019. These include ongoing strong investor and occupier demand for industrial and warehousing space and in particular Grade A accommodation, and therefore schemes such as ITT/St. Modwen’s Junction 6 & 7 M3, 200,000 sq ft warehouse and business space development in Basingstoke. Secondly there is sustained confidence in the South Central region supporting long term investment and as illustrated by Tellon Capital’s redevelopment of the Bargate Quarter in Southampton and £60 million purchase and redevelopment of the Chineham Shopping Centre in Basingstoke and numerous substantial acquisitions over the last twelve months, including Eastleigh Works being sold for £20.6 million and Palmer Capital and RLAM acquiring out-of-town retail investments at Hedge End and Farnborough respectively for figures in the region of £40 million.
Further trends include increasing demand for flexible co-working and serviced office accommodation and an ongoing shortage of Grade A industrial and office space continuing to apply upward pressure to rental levels.
Total returns are likely to be driven by income rather than capital in 2019 as yields flatten, and depending on the Brexit outcome, potentially increasing from the historically low levels achieved last year. Investors and occupiers will probably take stock during the first quarter of 2019 but will soon be under pressure to allocate available funds and progress longer term investment plans.
In 2019 the industrial and warehouse sector will continue to be the “engine room” of the commercial property market in our region with occupier take-up likely to once more exceed 1,500,000 sq ft and a mixture of institutional, overseas and Local Authority investors continuing to actively seek opportunities in this sector. Short term storage will be at a premium. Rents will increase from the current levels of £11 per sq ft for Grade A space in the upper M3 corridor and from £9.50 per sq ft in Southampton.
The office market may be more subdued with rents remaining at headline figures in the region of £21 per sq ft in Southampton, £24 per sq ft in Basingstoke and £27 per sq ft in the Blackwater Valley.
The retail property sector in our region is facing another difficult year in terms of the performance and stability of the large retail chains and the ongoing background of fierce competition from online operations. Secondary and tertiary retail locations will continue to try to attract independent retailers mixed with food and beverage operators with a view to improving the vibrancy and economic dynamic of our High Streets. Rental levels in most of our Centres have been adjusted to the post-recession circumstances and there is unlikely to be any significant movement during 2019.
In summary, 2019 will be a year when the property market in the M3/M27 region will need to ride the uncertainty of the political backdrop, but with the confidence of a marketplace that has shown sustained growth and prosperity over the years and one that is well placed to take full advantage of any economic bounce-back once the Brexit course is known. In other words, for now, it is very much business as usual.
We hope you enjoy solving the puzzles and look forward to receiving your entry by 18th January 2019.
Our very best wishes.
Here is this year’s Christmas Dingbats Puzzler click here
Acting on behalf of a private landlord London Clancy has sold the investment of 10 Ridgeway Parade, Church Crookham.
The premises comprising a total of 675 sq ft of ground floor retail/ancillary space let to a long established takeaway business as well as a first and second floor maisonette have been sold on a long leasehold basis.
The shop premises trading as Happy Fountain renewed for a term of 21 years, expiring 28th September 2034 with 3 year upwards only rent review patterns and without break options. The current passing rent is £16,100 per annum exclusive (including the current ground rent).
The quoting price was £240,000 for the freehold interest.
“We were delighted by the level of interest generated in this small lot and encouraged by the price achieved which clearly reflected the unbroken term remaining and 3 year review pattern,” reported Russell Ware of London Clancy.
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