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Swindon Industrial Market Review – Spring 2019

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Swindon Industrial Market Review – Spring 2019

Already much has changed in Swindon in 2019, not least with the news that Honda intend to leave their site at South Marston in 2021. For Swindon to have been able to boast of having a car manufacturer has been a huge badge of honour and it will not be easy to move forward. However, Swindon has reinvented itself before and will undoubtedly do so again. Whether this is by attracting another car manufacturer or through the redevelopment of the site for alternative employment uses is too early to tell, but it will create opportunity and perhaps even a net gain in employment in the longer term.

In the meantime, and despite the exasperating political and economic headwinds of the time, the fact remains that Swindon has one of the lowest levels of vacant industrial and warehouse stock on record. Although it has recently started to rise, it currently stands at 950,000 sq ft against a long term average of 1.4 million sq ft.

When broken down into size ranges above 5,000 sq ft, the following number of actual units are available: 5-10,000 sq ft – 9 units. 10,000-20,000 sq ft – 8 units. 20-50,000 sq ft – 11 units. 50-100,000 sq ft – 3 units. 100,000 sq ft plus – 2 units.

The decline in availability has coincided with a sustained period of steady demand with take up over the past 5 years also averaging 950,000 sq. ft.

This has involved an average of 71 transactions per annum, 75% of which have been in units below 10,000 sq ft.

As a consequence, rents and capital values have increased significantly, particularly over the past couple of years. This is compared to a sustained period of virtually no rental growth during the preceding 25 years.

Typical rents are now as follows:

Size:0-3,000 sq ft. New:£7.50-£8.50 sq ft. Good quality second hand:£7-£7.50 sq ft. Older Second Hand:£5.50-£6.50.

Size:3-10,000 sq ft. New:£7.50 sq ft. Good quality second hand:£5.50-£6.50 sq ft. Older Second Hand:£4.75-£5.50.

Size:10-50,000 sq ft. New:£7-£7.50 sq ft. Good quality second hand:£6-£7 sq ft. Older Second Hand:£4.50-£5.

Size:50,000 sq ft. plus New:£7-£7.50 sq ft. Good quality second hand:£6 sq ft. Older Second Hand:£4-£4.75.

As already mentioned, supply has started to rise since reaching a record low of 500,000 sq ft in mid-2017. In part, this is due to some recent speculative development, particularly the ‘Ignition’ scheme on the former Woolworths site at Dorcan, south East Swindon, the first phase of which is 198,000 sq ft in 7 units raging in size from 20,000 – 65,000 sq ft. There is also a further 75,000 sq ft in a single unit at Hillmead due for construction later in 2019. However, with a small growth in the number of properties coming to the market over the past few months, it may also be a sign of a more general slowdown. This would be consistent with the uncertainty over Brexit and the subsequent decline in business investment and it can only be hoped that this will be short lived.

Honda’s announcement could of course have serious implications for both the Swindon economy as a whole and the local industrial property market. Both Honda and its suppliers occupy a significant amount of industrial floor space which in addition to the manufacturing plant of 370 acres, includes a number of mainly larger warehouses. It is unlikely that all will be released to the market at the same time and it is entirely possible that this newly released stock could ultimately satisfy demand from other sectors. However, it is also possible that we experience short to medium term over supply, which may put downwards pressure on rents.

As well as having limited built stock, there is also very limited land supply, restricting both speculative and occupier led development. Consequently, land prices have started to rise significantly over the 0 per acre.

It is generally recognised that Swindon needs a major new employment land allocation and there are, in the medium term, several potential sites both north and south of the M4. This is in addition to the potential that the 370 acre Honda Manufacturing site may create. However, these are all some way off and will not be able to satisfy short term demand. Ordinarily, this should put pressure on existing stock. Nevertheless, with the Honda factor, Brexit and signs of global economic slowdown, this is not a certainty and we would advise clients to regularly consult with us on the latest trends and developments.

For further detailed information on the industrial market please contact Alastair Andrews on (01793) 423344 or alastair@loveday.uk.com

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