Warning over lack of industrial buildings as Swindon’s property market bounces back

January 28, 2014
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Swindon’s commercial property market bounced back strongly last year, leading to a shortage of large industrial buildings for expanding or relocating businesses, according to agents Alder King’s latest Market Monitor.

The report highlights resurgence in all sectors of the market in Swindon in 2013 – offices, industrial, retail and investment – as businesses in the town emerged from the downturn.

Swindon is in line with other parts of the South West in experiencing a five-year low in the supply of office and industrial space, according to Market Monitor. This is creating opportunities for new speculative development in the office and industrial markets. But in Swindon a number of local factors have given the market a unique dimension.

These include two large office buildings coming onto the market – Zurich’s UK Life Centre in the town centre and at Delta Office Park in West Swindon – meaning that although the take up of offices increased in 2012 the overall supply remained roughly the same.

And in the industrial sector – which has a larger influence on the Swindon market than in other towns – strong take-up has resulted in a dearth of large buildings available for immediate occupation. James Gregory, Alder King’s Swindon office partner, said there was now an “urgent need” to bring forward deliverable development.

Total take up of office space in the town last year was 1.02m sq ft, marginally down on the 2012 figure of 1.15msq ft. The lack of good quality stock pushed up headline rents for out-of-town offices from £16 per sq ft to £17.50 per sq ft. While the number of transactions remained constant last year, the average size of transaction was significantly larger.

In the industrial market, the total supply fell to 1.8m sq ft in 2013, again slightly down on the 2012 figure of 1.9 million sq ft.

The town’s retail scene was dominated by the Regent Circus leisure and retail scheme now under construction on the former Swindon College site. According to the Market Monitor this stimulated inquiries in and around Regent Street. Demand from food and convenience operators on arterial routes remained strong, with new outlets built at Mannington Retail Park, Wichelstowe and Dorcan.

The Swindon investment market soared from £3.77m to £67.2m last year.

James Gregory added: “After a positive 2013, the coming year will see more speculative office and industrial developments coming on stream across the region, with subsequent increases in headline rents and downward pressure on incentives.

“With a resurgent residential land market and strengthening investor confidence in the regions, we should see activity in the commercial property market return to pre-recession levels. 

“The fall in supply, combined with a marked recovery in occupier confidence, means prospects for further speculative development and rental increases in 2014 are the most optimistic since the downturn began in 2008.”

Alder King’s Market Monitor 2014 provides a summary of the commercial property market in towns and cities across the South West and South Wales.  The full report is available to download at http://www.alderking.com/media/121375/FINAL-Market-Monitor-2014-Web.pdf. A mid-year update will be published in July 2014.

 

 

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