Swindon badly needs new commercial buildings to keep up with spiralling demand from occupiers linked to electrification of the Great Western railway and the wider economic recovery, according to property experts.
The town’s commercial property market enjoyed a strong recovery in 2014 after several years in the doldrums – with both office and industrial markets witnessing an upturn. But growing demand is now outstripping supply as few new buildings were developed during the downturn.
The warning has come from property agents Alder King in the latest edition of its highly-respected Market Monitor report, which looks in depth at the property markets in towns and cities across the South West. 
It reveals that office take-up in Swindon rose last year by 14% to 227,000 sq ft – its highest level since the recession.
Swindon has traditionally had a strong out-of-town market and last year demand strengthened further with major deals from Nationwide and Swindon Silicon Systems,which took space at 29,000 sq ft (2,694 sq m) at the Trilogy Building at Kembrey Park and 34,000 sq ft (3,159 sq m) at Interface House, Royal Wootton Bassett, respectively.
However, the town centre market – which even before the recession had been relatively flat – saw a significant improvement – accounting for 30% of total take-up, mainly due to firms involved in the electrification seeking space close to the station.
This improvement, coupled with the conversion of poorer quality office buildings for residential use, eroded supply to its lowest level for 10 years, says the report. There is now a very small supply of good quality larger format office accommodation which has led to some speculative refurbishment.
This in turn helped push up the headline rent for town centre space from £15 per sq ft to £16 per sq ft. Quoting rents are being reviewed in many cases as landlords seek to take advantage of improved market confidence and tenant incentives are reducing as landlords’ confidence begins to improve.
Out of town rents remained at £17.50 per sq ft – although Alder King points out that quoting rents and tenant incentives are being reviewed as landlords seek to take advantage of improved market confidence.
A lack of large industrial transactions in 2014, caused mainly by a shortage of suitable supply, pushed industrial take-up down by 43% to 557,000 sq ft – its lowest level for more than 10 years – and 57% of transactions were under 5,000 sq ft.
The largest letting was Signalling Solutions Limited’s move to Dorcan Industrial Estate closely followed by Aldi taking two further buildings at South Marston Park.
Alder King said there are several large requirements in the market which are expected to complete early this year and will bolster the figure for 2015.
New buildings are coming on the market – on the Groundwell Industrial Estate the former Triumph and TD Packaging bases became vacant last year – meaning supply decreased only marginally to 1.7m sq ft. A speculative new build scheme providing buildings on the former Farepak site at Westmead is underway and the 100,000 sq ft Metro Building – also at Groundwell – is being comprehensively refurbished to create new space.
The retail and leisure market in Swindon was given a major boost with the opening of most of the Regent Circus development at the end of last year – the Cineworld opened last week. The scheme, which immediately changed hands for £40.5m, has been the catalyst for major improvements to the immediate area and occupier demand has been strong.
Retail is also recovering with H&M taking a new 25,000 sq ft (2,326 sq m) store in The Parade in the town centre, while on Great Western Way McDonalds opened a two-storey drive-thru and Wren Kitchens is carrying out a complete rebuild of the former Ferrari showroom.
Waitrose opened its first Swindon operation at Wichelstowe, which is trading well ahead of target, says the report. Aldi has secured planning permission for its fourth outlet in Swindon at Shaw in West Swindon.
The latest extension of McArthurGlen's Designer Outlet Centre opened allowing several existing occupiers, including Marks & Spencer and Next, to expand as well as attracting new retailers.
Swindon also benefited from a strong regional investment market as funds were forced out of the overheating London market. Investment deals worth £76.5m were signed off – a 14% increase on 2013’s figure and the highest value of transactions since 2007.
Alder King Swindon partner James Gregory, pictured, predicts further increases in activity levels across all property sectors in the town this year, with robust demand for quality commercial space and well-located sites together with further rental growth.
“The challenge for 2015 is to bring forward more speculative development in key locations to replace dwindling stock and meet rising demand,” he said.
“There is strong occupier appetite for Grade A accommodation. Further office and industrial schemes need to come on stream over the next 12-18 months if developers want to capitalise on this market cycle.”
His views echo those of other property developers and agents in the town. Last month Nigel Godfrey, UK head of Gazeley, said strong interest in the firm's G.Park scheme at South Marston – which houses B&Q's giant 800,000 sq ft distribution depot and where TNT is building a 55,900 sq ft parcels base – was a sign that Swindon needed more employment land, particularly as its location on the M4 made it a magnet for retailers and logistics firms needing new sites to deal with the online retail boom.
However Muse, the developer behind the Kimmerfields town centre regeneration, has said it is unlikely to build its 600,000 sq ft grade A office scheme speculatively.
