Investment activity has grown to unprecedented levels and speculative development is also back with a bang, according to the annual Industrial & Logistics Market report by commercial property consultancy Lambert Smith Hampton.
The latest edition, published this week, reveals that UK take-up rose 8% from 2013’s level to reach 103.3 million sq ft. This was the result of robust economic expansion and the continuing structural change in the retail and distribution sector caused by the growth of online shopping.
The market in Milton Keynes delivered a solid year with take-up of 2.5 million sq ft, a 3% increase on 2013 figures. Availability, however, has fallen to its lowest level since 2007 and good quality employment land is now crucial to enable future growth and satisfy demand, the LSH report says.
The situation in Milton Keynes reflects that nationally where strong recovery in demand has put the supply of industrial stock under acute pressure and started to influence the nature of occupier activity. Total take-up in 2014 included a 934,000 sq ft pre-let to Waitrose at Magna Park as supply constraints along the M1 corridor fuelled the design and build market.
In Milton Keynes, availability at two million sq ft is the lowest since 2007 with almost a fifth reported under offer. Across the South East, availability is at its lowest since 2008.
Milton Keynes head of office Lloyd Spencer (pictured) said: “With limited availability in Luton and Dunstable driving enquiries up the M1, Milton Keynes should be able to capitalise on this opportunity but with a lack of good quality stock and limited development opportunities it will be unable to.”
With economic growth forecast to strengthen and with availability diminishing, Lambert Smith Hampton predicts that prime and secondary rents in many markets will surpass their pre-recession highs in the next 12 months.
In Milton Keynes, rental growth of up to 7.5% and a hardening of incentives were seen across many smaller multi-unit schemes, which saw 63 transactions in 2014 accounting for 85% of take-up by number.
In the investment market, a record £6.6 billion of industrial assets changed hands nationally in 2014, highlighting the sector’s positive fundamentals. Milton Keynes saw much of this activity concentrated in the second half of the year.