Swindon urgently needs speculative commercial property development to meet spiralling demand from office and industrial occupiers, according to agents Alder King’s latest Market Monitor Update report.
The supply of offices, factories and warehouses in the town is now down to its lowest for more than 10 years, the report says – the combination of soaring take-up in the first six months of this year with a lack of new building around the town during the recession.
And with the growing trend to convert office buildings for residential use, the situation will only get worse, says Alder King. 
While the Swindon market bucked the regional trend in the first half, Alder King’s Swindon office is predicting an even stronger second half of the year as the town continues to punch above its weight.
The report says there are many unsatisfied active office and industrial inquiries in Swindon, coupled with the return of small-scale speculative development.
Alder King partner James Gregory said: “Swindon is punching above its weight so far this year, recording very strong levels of take-up.
“The record low level of supply is a major concern – more speculative development is urgently needed to provide businesses with the quality accommodation they require.”
The supply of office space in and out of town has fallen to 690,000 sq ft, the Market Monitor Update shows.
Significant transactions included Nationwide’s acquisition of 70,000 sq ft (6,503 sq m) at Optimus, Windmill Hill, and BP’s 36,000 sq ft (3,344 sq m) acquisition of Auckland House at Lydiard Fields.
The vast majority of take-up was out of town with less than 5% of transactions taking place in the town centre.
The level of supply was also eroded by the acquisition of several former office buildings for residential use including Avebury House and Dauntsey House at Stonehill Green in West Swindon and Guild House and Electra House in Farnsby Street in the town centre, the report says. These last two reflect an improving appetite for residential development in the town centre.
Rents have lifted to a record of £18.50 per sq ft, which was achieved at Auckland House. £17 per sq ft was achieved at Optimus and Arclite House at Peatmoor.
The report says reduced levels of incentive were being offered and subsequently agreed for most lettings and competitive bidding had returned to the marketplace on one new office scheme.
The lack of good quality stock in the town centre will be eased by the refurbishment of oHFocal Point, recently vacated by Gallagher Heath, which has been sold at auction.
Take-up in the industrial market in the first half of the year was so strong it almost matched the figure of 557,000 sq ft achieved in the whole of 2014.
Significant transactions have included Hackling Transport’s 200,000 sq ft (18,580 sq m) acquisition of the former BCA Building at Groundwell Industrial Estate, Robnor Resins’ 67,000 sq ft (6,224 sq m) acquisition of 67K at Athena Avenue at Elgin Industrial Estate and Boxes & Packaging’s 56,000 sq ft (5,200 sq m) acquisition of Unit 3C Pagoda at Westmead.
Five warehouses were let at the Birch Estate at Kembrey Park this year, further demonstrating the demand for good quality accommodation, says the report.
Supply has dropped to just 1.3m sq ft – its lowest level for over 10 years – and the only large buildings available are restricted to Groundwell Industrial Estate.
Two small unit speculative schemes are under construction at Glenmore’s Westmead scheme, where some occupiers have already moved in, and at Rockhaven’s Kembrey Park scheme where construction is well underway.
While industrial rents remained level in the first half at £6.75 per sq ft some landlords have reviewed their quoting rents and begun to increase these as confidence continues, says the report.
Alder King’s respected Market Monitor Update, which provides an overview of the commercial property market across the South West, reveals that the region as a whole recorded a slight drop in take-up at 3.1m sq ft, due in part to the uncertainties of the General Election and the lack of quality supply. Alder King predicts stronger take-up and rental increases in the second half of the year.
The supply of offices across the South West peaked in mid-2012 at 5.7 million sq ft but has fallen by 49% to 2.9 million at the 2015 half year point. After peaking in 2009 at 9.98 million sq ft, industrial supply has also dropped year on year to 4.1 million sq ft at the 2015 half year point.
