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Welsh Industrial Property Take up Rises in Second Half of 2018

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The second half of 2018 saw increased transaction activity in Wales for occupied industrial units over 50,000 sq ft, according to the latest research from commercial property consultancy Knight Frank.

Take up during the period reached 1.25 million sq ft, almost more than 500,000 sq ft greater than recorded for H1 2018 and a similar level to the same period in 2017.

Neil Francis, head of the Industrial & Logistics team of Knight Frank in Cardiff, said:

“These figures were boosted after the summer period by two of the largest industrial sales witnessed in the past 12 months.

“Associated British Ports acquired the 190,000 sq ft Neptune Works on 10 acres in Newport as part of its strategy to develop port facilities around the country and deliver an increased commercial property provision, whilst Figsand Limited relocated its manufacturing facility to 188,000 sq ft at Merthyr Industrial Park, Merthyr.

“In addition, it was also pleasing to see Transcend Packaging committing to its growth in South Wales by agreeing a new lease on the 167,000 sq ft former Council facility at Dyffryn Industrial Estate, Ystrad Mynach.”

The Knight Frank research highlighted that five of the 11 transactions were on a leasehold basis – a shift from the first half of the year when only one leasehold deal over 50,000 sq ft was recorded.

The trend of recent years, with local companies expanding their presence within South Wales, also continued with Wild Water Logistics and Owens Road Services acquiring 130,000 sq ft and 101,000 sq ft respectively.

“These moves highlight the growing demand from operators in the rapidly growing Urban Logistics Market and with the abolition of the Severn Bridge Tolls we expect further warehouse transactions into 2019,” said Neil Francis.

On the supply side within Wales as a whole, approximately three million sq ft was available in units above 50,000 sq ft, only 300,000 sq ft less than the figure reported at the end of 2017.

Neil Francis said:

“Sadly though Grade A space only accounts for circa five per cent of this availability, and this continues to highlight the need for large scale development within the area.

“It is also worth noting that, for units of 20,000 sq ft to 50,000 sq ft, demand continues to be so strong that, similar to the “big shed” market, all good quality stock is being acquired and in many circumstances record capital value and rental levels are being paid with incentives on new leases not as hard as they were in recent times.”

Looking ahead, the report stated that decisions on the M4 Relief Road would be important in driving forward development and increasing activity. The research highlighted that there were a number of units over 50,000 sq ft currently under offer to occupiers which, should they complete, would result in a positive start to activity in 2019.

Next year will also see progress being made on three speculative developments within South Wales with St Modwen progressing two units of 30,000 sq ft and 100,000 sq ft at Celtic Business Park, Llanwern, Welsh Government with 50,000 sq ft in Ebbw Vale, and Border Group constructing circa 52,000 sq ft in Oakdale.

Neil Francis concluded:

“It is also positive to note that we are now witnessing a number of occupiers prepared to consider new build options, as opposed to waiting for better quality second-hand stock to be released into the market.

“With a number of development sites close to the M4 Motorway ready for immediate development we anticipate being able to announce a number of new projects towards the summer of next year.”