Overall take up drops 56% across the South East Industrial Market
Take up in the first half of 2024 is down by 56% across the South East industrial market, according to SHW’s H1 2024 Industrial Focus, however the outlook for the next 12 to 18 months is more positive with the political and economic climate now becoming more certain, and 3.5 million sq ft of lease events scheduled across the region, recorded on SHW’s exclusive database.
Tim Hardwicke, SHW’s partner and head of agency, comments: “The first six months of the year have shown overall take up is down, compared with H2 2023. Although the second half of the year usually records a higher level of take up, this significant decrease is reflective of the uncertainty in the market – economically and politically – which has delayed many occupiers’ decisions on property moves. However, there is a more positive outlook going forward. With a new government now in place and interest rates widely expected to decrease imminently, backed by the large number of lease events due over the next 18 months, we are expecting transactions to increase, bringing take up back to an annual average.”
In the core South London market, take up levels dropped 19%, Mid Sussex showed a drop of 85%, with Crawley & Gatwick down by 79%. There were some exceptions across the region for example with Brighton & Hove take up increasing by 212%.
Rents have remained static in most areas across the South East markets, with a couple of exceptions: Eastbourne, Hailsham & Polegate have seen achieved rents increase from £12.50 to £12.75 per sq ft; and in Hastings, St Leonards and Bexhill rents have jumped from £9 per sq ft in 2023 to £10.50 per sq ft this year.
Tim adds: “There are a raft of new Grade A, sustainable developments coming through over the next 12 months. These are in prime locations where supply of Grade A stock is low and subsequent transactions are likely to push rents to a new high.
“The importance of ESG continues to move up the list of significant considerations, both to occupiers and investors alike, and is starting to be a driving force for industrial activity. Increasingly high utility costs are making ‘green building’ with lower running costs even more attractive.”
New schemes becoming available include Phase 2 of Prologis Park Beddington (Croydon), which will provide four new units totalling 90,000 sq ft this year, and GLI’s CR1 (on site now) and CR2 totalling 107,770 sq ft in Croydon. Panattoni Park Brighton is also now available to occupy providing multi-let units from 19,5000 sq ft.
Tim concludes: “In terms of investment and development, investment yields remain stable and are likely to remain so until interest rates start to reduce, but there are considerable funds waiting to be deployed whilst developer appetite for sites continues, in preparation for this expected economic boost.”
