Industrial market surge on South Coast sees rents rise by up to 30%

Head of Agency, Russell Mogridge, prepares to give his take on the industrial market at the South Coast Commercial Property Show.
October 26, 2023
Scores of commercial property specialists will hear how the Solent region’s industrial & logistics sector is booming despite the UK’s economic headwinds.

Workplace requirements from many of the 42,000 businesses based in and around the international gateway ports of Portsmouth and Southampton has caused rents on industrial and warehouse units to soar by nearly one third in recent years, with demand outstripping supply.

Russell Mogridge, Head of Agency and a Partner at property consultancy Vail Williams, will tell visitors at the annual South Coast Property Show: “We have seen rental growth of between 20%-30% over recent years and no sign of this easing in the short term yet, with best bids for both freehold and leasehold property becoming commonplace.”

He is on a discussion panel of five experts exploring the factors contributing to the industrial market surge on the South Coast and what needs to be done to “unlock pent-up demand”.

The fourth South Coast Property Show takes place at Action Stations, a naval-themed indoor arena at Historic Dockyard, Portsmouth, this Thursday [2 November].

An advance copy of Russell’s talk states that “the industrial & logistics market in 2023 on the South Coast has continued to be strong, despite the Bank of England interest rate rises in response to galloping Inflation and increased business rates and energy costs”.

Russell, who works out of Vail Williams’ offices at Lakeside North Harbour business campus in Portsmouth, and Ocean Village in Southampton, adds: “Demand has been strong, owing to continued demand from business for good quality, well accessed space with high eaves, close to the motorway and skilled labour.

“Demands for power have continued as well, not least to support electric vehicles.

“New buildings enable business to operate more efficiently, making best use of the volume of the building, but also to assist with recruitment and motivating the existing workforce.

“This is fuelled by a low supply of available modern building. Land is in competition with the housing industry.  We have also seen a two-tier market emerge from business owners and industrial developers, as land values have softened but demand remaining strong.”

The event will hear that hot spots for strong rental growth include Eastleigh/Chandler’s Ford and Nursling, benefitting from the M27/M3 interconnection, Parkway railway station and Southampton Airport.

Portsmouth and the A3(M) (south of Petersfield) corridor is also strong, with new schemes such as Proxima Park and Dunsbury Park, Waterlooville seeing “great take up”.

Proxima Park recently let a new speculative built building of 43,287 sq ft to Portsmouth-based Kite Packaging and is now fully let, with build-to-suit options attracting strong interest on remaining development plots.

Russell says: “Portsmouth continues to attract demand for units across all size ranges, with particular sweet spots for 2,000 sq ft to 5,000 sq ft and 10,000 sq ft to 15,000 sq ft, which the likes of Railway Triangle at Farlington and Voyager Park and Pioneer Park are providing.

“Wrenbridge Developments is responding to this, having the foresight to purchase a 4.5 acre plot at Limberline Road, Hilsea, last year.

“They have since secured consent to build a new multi-unit industrial development; there will be seven units from 5,479 sq ft to 35,220 sq ft available for occupancy next summer and currently tasking reservations.

“M27 junction 9, Segensworth, continues to prove attractive with very limited options for occupiers to expand, with limited land availability for developers to provide new space; rents in Segensworth hit £13 sq ft this year for units below 5,000 sq ft and the forecast is for rents to continue to grow.

“Elsewhere, at Test Lane, Southampton, Salmon Developments /Royal London are progressing with their speculative industrial scheme – Quest 271.

“This will provide three warehouse units from 44,309 sq ft, quoting an eyewatering £15 sq ft – but no doubt will achieve this when it completes in January, hot from Tungsten Properties’ run of lettings at Penta Park, Eastleigh – a speculative scheme on the former Ford Factory site by junction 5 M27, quoting £12.75 sq ft.

“Meantime, Power Park, Eastleigh a five-unit speculatively constructed scheme by Oxenwood Real Estate, providing units sizes from 13,422 sq ft to 55,012 sq ft is nearly fully let with rents in the order of £13 sq ft.”

Switching to the west in Dorset, where Vail Williams has an office in Bournemouth, Russell will highlight one of the biggest schemes to complete this year.

Northwood Urban Logistics’ 26 multi-unit scheme at Bedrock Park, Ferndown, ranges from 2,688 sq ft to 33,735 sq ft, and is attracting a variety of businesses, from Ducati Motorbikes to Bunzl. The scheme is now nearly 50% let.

Russell will conclude: “The industrial & logistics sector continues to attract investment, whilst business owners will continue to be challenged to find suitable premises at affordable rents.”

The South Coast Property Show, which has established itself as a must-attend event for anyone involved in the vibrant South Coast property market, provides a platform for industry leaders to share knowledge, network, and explore latest trends and innovations.

Spectrum is the main sponsor and partners are Bournemouth Property Association, Portsmouth Property Association and Southampton Property Association.