Surrey industrial property: Build it or invest in it, and they will come

As we move through 2024, we have seen a good level of industrial activity in Surrey and a transition towards more quality premises, with the delivery of some much-needed Grade A industrial and logistics stock to meet occupier needs.

However, with the flight to industrial quality continuing, we need to see more supply of this if we are to retain occupiers here, as Surrey industrial expert, partner Maria Hoadley, explores.

When industrial occupiers think about a place to locate their business, they may not automatically think about Surrey, but perhaps, with a little more investment in stock here by landlords, they could and should.

Having seen some 210,000 sq ft of industrial space let since January spanning over 30 deals, well above the 10-year average of 120,000 sq ft, we are starting to feel a sense of buoyancy here once more.

The majority of deals were transacted in Guildford, Camberley and Farnborough for smaller units in the sub-10,000 sq ft.

This is because existing occupiers in the Surrey industrial market are SMEs, start-ups or family-run businesses with smaller requirements, which is why the average size of unit let in Surrey this year is approximately 7,000 sq ft.

But that’s not to say that larger occupiers don’t want to locate to particular towns across Surrey. The question is, what are the gains for firms that base themselves here?

Competitive industrial rents in Surrey

We see a good churn of enquiries for industrial space here, particularly in the sub-10,000 sq ft category as that’s where the market is. However, that’s not to say that warehouse units of  50,000 sq ft and above won’t let, if priced at the right level.

Whilst prime industrial rents here have risen by 5% in some cases, sitting at around £25.00 psf for Grade A stock closer to the M25, most available stock can be leased for sub-£18 per sq ft.

The challenge for the Surrey industrial market is the dearth of quality Grade A stock available on the market here.

Demand for ESG-activated stock outweighs supply

Occupiers increasingly want environmentally friendly buildings on sites which are both accessible and powered-up, however, supply of ESG-activated stock remains limited.

Weybridge, Byfleet and Staines tend to attract larger, ESG-focused occupiers that are more logistics and manufacturing orientated.

Prologis has just delivered 124,223 sq ft of logistics space in Weybridge. Brooklands DC1 provides occupiers seeking a manufacturing and distribution facility with a rare opportunity at a world renowned manufacturing and logistics location. Again, this site boasts EPC Rating A+ and BREEAM excellent credentials to meet occupier needs, with a clear internal heigh of 12.5m.

Meanwhile, in Byfleet, we are marketing a refurbished 10,000 sq ft unit at on the Chertsey Industrial Estate, with an EPC Rating of B.

Woking, Guildford and Staines have the opportunity to attract more SME occupiers, owing to the smaller scale of units they are able to cater for.

Causeway Park in Staines is delivering some much-needed Grade A supply. At just a six-minute drive from Heathrow Airport and situated close to both rail and road transport, Causeway Park offers larger occupiers the chance to locate in high-quality units targeting EPC A+ and BREEAM excellent ratings.

Causeway Central will bring four highly sustainable premises to market. Unit 4 is already available to let, meanwhile Units 1-3 will come to market in 2025.

In Chertsey, we are marketing Chertsey Industrial Park where achieved rents sit at £21.50 psf owing to the quality of the units, the EPC Rating A and three-phase power supply. We have a unit currently under offer here and other smaller units available between 3,202 sq ft and 6,598 sq ft.

Meanwhile, in nearby Egham, we are sub-letting a 16,878 sq ft industrial unit at Unit 4 Thorpe Industrial Estate, Alpha Way. At Coulsdon, we are marketing a newly refurbished 25,000 sq ft unit targeting £16.95 psf with joint agents Cushman & Wakefield.

This will be the most interesting standalone industrial unit of a substantial size in the area, in an extremely prominent location with little comparable supply in the surrounding area.

On the market

Mind the industrial supply gap

Thanks to the challenges of the last 18 months where build costs reached eyewatering levels and the general political and economic landscape made industrial development more questionable, we now have an industrial supply gap within certain locations in the Surrey area.

This is particularly true for quality units in the sub-10,000 sq ft category which boast the ESG credentials necessary to attract occupiers.

Our message to Surrey industrial property landlords is that there is absolutely demand here.

If you have a secondary or tertiary asset and invest in it to deliver a quality product back to market, with EPC ratings of B and above and good or excellent BREEAM ratings, your asset will let and at strong rental levels.

For industrial occupiers seeking a value for money location in the south east, Surrey should be on your geographical radar, particularly if you want to be close to the M25 and/or Heathrow Airport, but don’t want to pay the rents that come with locating in Heathrow.

Meanwhile, for those developers that have been trying to make viability stack up and will need to see land values development costs level out a little more in order to take that next step here, if you build it, they will come.

With approximately 30 industrial lettings on the board in Surrey already this year, there is a real opportunity in this market and with one of the largest agency teams in Surrey, Vail Williams’ industrial property agents are here to help.

Our team of agents can support occupiers seeking to lease premises, as well as landlords with assets to let and developers wanting to explore viability and secure planning permission for new industrial schemes in Surrey. As a full-service property consultancy, we can help with everything from occupier and landlord advisory, dilapidations assessments, to building consultancy, valuation, planning and development, and your energy and sustainability needs.