Demand for industrial and logistics space over 50,000 sq ft is soaring in Wales, according to new research by global property consultancy Knight Frank.
Take up in quarter two of this year (Q2) was around 720,000 sq ft in 9 separate deals – almost 450,000 sq ft more space and four times more deals than in the same period last year.
Neil Francis, head of logistics and industrial at Knight Frank in Cardiff, said: “The take up was also 230,000 sq ft up on the first quarter of 2021, which saw five deals transacted.
“However, while freehold sales have dominated the figures in recent times, leasehold accounted for twice as many deals as sales in this quarter.”
The biggest letting of 120,000 sq ft at Fforest Farm at Junction 32, Cardiff where Cytiva, a global provider of technologies and services that advance and accelerate the development and manufacture of therapeutics, have agreed a new lease.
Mr Francis “This quarter we have continued to see the growing trend for warehouse uses, with local occupiers expanding their facilities. This includes CCS McClays taking 74,000 sq ft in Cross Keys, Something Different acquiring 150,000 sq ft in Swansea and E-Warehousing adding a further 60,000 sq ft at Pontypool.”
The report noted that while availability stood at just over 6 million sq ft more than a quarter of this space was spoken for, with Ford accounting for 1.6 million sq ft of and a further 1 million sq ft at QRL, Newport.
In terms of new build, St Modwen is close to finishing its 101,000 sq ft at St Modwen Park, Newport.
Mr Francis said: “We are pleased to confirm good levels of interest and terms are being discussed for this unit so we hope to be able to report a new letting for Q3.
“Deeside Developments is also progressing with the construction of its 46,000 sq ft unit at Pencoed and, similar to Newport, it is pleasing that we have good levels of early interest to report.
On the outlook Mr Francis said: “Moving forward into Q3 we are expecting the current market trends to continue. With a number of buildings under offer take up will continue to rise, which will increase headline rents and harden incentives. All this should provide confidence for the much needed speculative development of units from 30,000 sq ft and 150,000 sq ft.”
For the UK as a whole take up of warehouse space in units larger than 50,000 sq ft reached a record 30.8 million sq ft in first half of this year double that recorded in H1 2020.
Retailers and distribution companies collectively accounted for 76% of take up so far this year, as they seek to expand their online and home delivery capacity in response to growing levels of e-commerce penetration. Online sales accounted for 28% of retail spend in 2020, up from 19 per cent in 2019, and in the first five months of 2021 this rose to 32%.
Even as lockdown measures ease further in the second half of the year, online platforms will continue to play a much bigger role in the retail market than they did pre pandemic with Knight Frank saying this will necessitate more structural changes in retail supply chains.
