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Demand expected to increase further as economy regains momentum
Glasgow, 25 February 2013 – Occupier demand in the Scottish “big sheds” industrial market grew over the course of 2012, with Grade-A take-up twice as high in the second half of the year compared to January-June figures.
Jones Lang LaSalle’s UK Big Box Industrial Logistics report shows overall take-up of units larger than 100,000 sq ft across the UK in 2012 was less than that recorded in 2011 due to a lower level of activity recorded in the first half of 2012.
In Scotland, demand for larger industrial units is predicted to increase further, with the letting of Eurocentral’s 71,576 sq ft Apex unit to Stapletons Tyre Services an example of a market upturn.
Despite a slowdown in Grade-A occupier demand in 2012, total availability fell across the UK. At the end of December this stood at 22.1 million sq ft, 15 per cent lower than at the end of June 2012 (25.9 million sq ft). There was 8.3 million sq ft of new floorspace available at this time, including 332,000 sq ft of space speculatively under construction (the lowest levels recorded by Jones Lang LaSalle since 2005).
Neil Cockburn, lead director, Jones Lang LaSalle, Glasgow, said: “An increased interest in the Big Box market is being driven by the UK and world economic outlook, which is getting significantly better.
“The businesses we have seen showing an interest in these units are often US or Canadian-owned, so global finances have a critical role to play. The diminishment of the ‘fiscal cliff’ scenario in the US will see increased activity from the large corporates and mean investors are more confident to move outside North America.
“The corporate world has been in limbo for three years, but there are strong signs now that things are starting to move forward.”
Across the UK, retailers accounted for 36 per cent of all Grade-A Big Box take-up (4.2million sq ft), eight per cent down on 2011. Manufacturers increased their share of take-up from 13 per cent in 2011 to 29 per cent (3.5million sq ft) in 2012.
Tim Johnson, head of industrial and logistics at Jones Lang LaSalle, said: “The availability of immediately-available new floorspace is now at its lowest level since our records began, at just over eight million sq ft UK-wide. This is 71 per cent below its pre-recession peak of nearly 29 million sq ft in March 2008. This definitely affected take-up levels last year.
“There are still a number of active requirements in the market, and 2013 is getting off to a strong start with 1.4 million sq ft already signed. The availability of good quality space is now a real issue, and as a result occupiers are being forced to consider Build-to-Suit while there isn’t the new stock available. Developers who own sites with infrastructure and planning already in place will therefore benefit.”
There are a number of regions where available new supply is well below the recent level of take-up –including the South East and Eastern England and the North West of England, which may see some speculative development later this year.
Headline rents in the UK Big Box distribution market remained largely unchanged over the course of 2012 although, in general, incentive packages available to occupiers diminished.
Investor demand remains focused on prime stock which ticks all the boxes. There is also interest in good secondary stock, but only in strong, established distribution locations.
The Titan building at Centralpoint, by Eurocentral, North Lanarkshire, is on the market now, and is expected to attract attention from large distribution and manufacturing firms in 2013. It offers 116,987 sq ft of warehouse space and 5,496 sq ft of first-floor office space, a 48m deep yard, 12m eaves, 12 dock levellers and four standard doors we well as 62 car parking spaces and fast access to the M8, M73 and M74. Glasgow and Edinburgh are 30 minutes away, with Prestwick International Airport’s freight terminal within a one-hour drive. It is currently available to lease with unrivalled terms on a full repairing and insuring basis.
To see the full report, or for information on opportunities in Scotland’s Big Box market, contact Neil Cockburn on 0141 567 6628 or Neil.Cockburn@eu.jll.com.
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Notes to editors:
The report focuses on Grade A quality distribution space comprising both new and good quality second-hand space of units 100,000 sq. ft. and over. It is available to view here.
0141 567 6628