Expert monthly market commentary by Goadsby (Commercial)

The industrial/warehouse sector has been surprisingly busy since the first March 2020 lock-down, writes Chris Wilson, Director and Head of Commercial Agency, Goadsby.

But it’s primarily with lettings and sales of smaller units to new start-up/small businesses taking advantage of there currently being no business rates to pay on properties with a rateable value of less than £12,000.

Confidence amongst businesses requiring units of 10,000 – 50,000 sq ft continued to be fragile with companies preferring to wait and see rather than risk an expansion in uncertain times.

Accordingly, the supply of these larger buildings started to increase with owners and landlords becoming increasingly worried as to whether they would be able to let/sell their vacant property.

However the announcement of a Covid vaccine in November 2020 was a game changer.

The Central South Coast industrial market changed overnight with a flurry of now confident companies rapidly trying to secure future expansion premises.

A number of transactions were rapidly agreed with examples including the 130,000 sq ft in Poole vacated by Southernprint in July 2020 being snapped up by four separate warehousing companies.

50,000 sq ft at Woolsbridge Industrial Estate has been let and 30,000 sq ft at Poundbury, Dorchester and a 40,000 sq ft, 12m high brand new warehouse in Poole are both now under offer.

Furthermore terms have been agreed for 35,000 sq ft at Ferndown Industrial Estate and a range of 10 -15,000 sq ft units in Poole, Wareham, Verwood and Christchurch.

Those developers that continued to speculatively develop over the last 12-18 months are now seeing the fruits of their labour, particularly if offering premises for sale.

We have been surprised by how many cash investors have purchased new speculative industrial/warehouse units at Axis 31, Woolsbridge Industrial Estate, often off and plan pre-marketing launch.

Investors have been particularly attracted to new high eaves starter units built to a high specification.

The benefits being that the units should let quickly due to tenants not having to pay business rates, yields of 6-7% and the 7m eaves providing the much required volume needed by an ever growing number of online sales companies requiring warehouses.

We are concerned that very soon there will be a shortage of industrial/warehouse properties to let/for sale.

This will not only be comforting to those expanding companies thinking about letting/selling their current premises but also any developers debating whether or not to commence the speculative development of their employment land.

This shortage will inevitably lead to higher industrial/warehouse rents/prices and should put the Central South Coast back on a par with the M27/Southampton region.