Citation
(1998), "Industrial floorspace today - national", Property Management, Vol. 16 No. 3. https://doi.org/10.1108/pm.1998.11316cab.003
Publisher
:Emerald Group Publishing Limited
Copyright © 1998, MCB UP Limited
Industrial floorspace today - national
Industrial floorspace today national
Some 900,000 m2 of industrial and warehouse property was reported as sold or let in the UK in the last four months of 1997, according to the latest Industrial Floorspace Survey by Chartered Surveyors King Sturge & Co.
This is double the total for the first four months of 1997 and reflects a steady increase in "take-up" during the year.
The West Midlands region provided the largest contribution to "take-up" in the period at over 200,000 m2, the South East some 192,000 m2 and the North West 114,000 m2.
King Sturge reports that enquiry-based demand has flattened somewhat from the strong growth in the previous four months but with registered enquiries for just under 8 million m2 of property, the level remains some 30 per cent higher than 12 months ago.
Availability down
The available industrial floorspace in the UK continues its downward trend with a 5 per cent reduction in the last four months of 1997. Down by 735,000 m2, the total now stands at 13.1 million m2. In England and Wales, a similar decrease is recorded bringing the figure down to 11.7 million m2 the lowest since September 1991.
The biggest drop in availability is recorded in the North West region of England, with a 10 per cent reduction. The West Midlands is down by 8 per cent and the East Midlands is down by 7 per cent. The South East overall is down by 7 per cent also, while the South West shows a 4 per cent reduction. Other regions show modest falls, but Yorkshire and Humberside records the only increase of 2 per cent. Scotland is down by 4 per cent.
Large buildings
The King Sturge survey shows a virtually static return in the UK. Down by a marginal 19,000 m2, the total is now 2.36 million m2. In England and Wales a 2 per cent increase is observed with a rise of 37,000 m2 to 2.15 million m2. This category, which comprises buildings of over 10,000 m2, provides 18 per cent of the overall available stock.
New property
Less new industrial floorspace is registered on the market in this survey. A decrease of 2 per cent or 16,000 m2 in four months produces a total of 716,000 m2 remaining at just 6 per cent of the total floorspace available in England and Wales.
King Sturge continues to express concern over the lack of new premises on the market but point out that while pre-war buildings are often considered as suitable candidates for re-development, occupiers may be found for these properties.
For example, during 1997, Thrall Car Manufacturing Company of Illinois, leased 28,000 m2 of older floorspace at the former railway works in York. This transaction indicates that factors such as overall design, construction and layout may be more important than the age of the premises.
Development pipeline
Projects either under construction or committed to complete within the next year will add around 375,000 m2 to supply with some 2,000,000 m2 thereafter. This reflects continuing confidence in the market and the improving climate of demand over the last year.
The active property market is encouraging developers with more speculative construction apparent in most regions of the country. However, the majority of developments require commitment prior to construction.
Some 110,000 m2 of development is planned or committed in the South East, with plans in the Midlands and North for over 250,000 m2 of potential industrial development.
Rents
The King Sturge index of industrial rents reflects the recent output revisions seen in most economic forecasts. A consensus view of the likely impact of the Asian crisis on the performance of the UK economy is that it will wipe between 75 and 100 basis points off GDP in 1998 and 1999. Making allowance for a six to nine months time lag over the wider economy, the 5 per cent industrial rents rise in 1997 is expected to fall back to around 4 per cent in 1998.
The King Sturge Survey is conducted three times a year in April, August and December. The survey covers the total area of buildings on the market over 500 m2 in area but excludes properties marketed at or near site value as well as semi-derelict property unsuitable for refurbishment.