Lack of industrial property pushes up rents

Citation

(2001), "Lack of industrial property pushes up rents", Property Management, Vol. 19 No. 2. https://doi.org/10.1108/pm.2001.11319bab.016

Lack of industrial property pushes up rents

Lack of industrial property pushes up rents

Keywords: Industrial property, Rent

The industrial property market is in good shape but with a lack of supply in some areas rents are being pushed up to unprecedented high levels according to international property consultants King Sturge. The pound sterling has remained steady against the dollar for the past two years, despite its high value against the falling euro. Neither the currency realignment nor the high price of oil in the global marketplace has adversely affected the industrial property market.

Despite a recent increase, unemployment levels remain low as is inflation at 2 per cent or 3 per cent as measured by the retail price index. However, rents in many markets are growing at more than twice this rate. Angus McIntosh, King Sturge partner and head of research, sees changes in the global economy with the speed of growth of the Internet as having a marked effect in certain areas of property availability and rents. For example, where Internet Service Providers wishing to occupy Telehotel facilities are competing for space with traditional warehouse/industrial occupiers, a limited supply of suitable property is being stretched, forcing up rent levels.

In certain areas developers and investors are reluctant to build speculative development. However, in some markets modest levels of new supply are being created. In other areas demand and rental levels have not provided sufficient confidence for new construction.

Available industrial floorspace

In its latest report, "Industrial floorspace today", King Sturge note a steady market in industrial property in England and Wales with a decrease of just 1 per cent in the past four months in the total of industrial property available for sale or to let.

The new total of 11.436 million m² shows a variation of less than 1 per cent over the last two years.

Regional variations are apparent in the survey with the south east, accounting for almost one-third of the English total, showing a reduction of 5 per cent in industrial property on the market and the south west showing a 6 per cent drop.

Conversely the West Midlands shows an increase of 6 per cent and East Midlands 10 per cent; East Anglia is up by 2 per cent and Wales by 1 per cent.

In the Northern regions, mixed figures show a 3 per cent increase in the north-west with decreases of 4 per cent in the north and 10 per cent in Yorkshire and Humberside.

Scotland continues its uplift with a rise of 11 per cent to 1,888 million m² contributing 14 per cent of the British total.

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 square metres in area but excludes properties marketed at or near site value, as well as semi-derelict property unsuitable for refurbishment. Details of the report and survey may be seen on www.kingsturge.com