Rents continue to remain robust and in most locations are continuing to rise, according to the latest market research reported in SHW's Industrial & Logistics Focus Q3 2023.
Tim Hardwicke, SHW's Partner and Head of Agency, comments: "Due to a number of factors, such as land prices, build costs and softening of yields, rents are healthy however, as expected, the rate of increase has slowed, and we are seeing a marginal increase in incentives across the South East industrial market.
In South London, rents have increased again for new builds from £19.75 per sq ft in 2022 to £21.50 per sq ft so far this year. Take up to date is exceeding the half year figures of 2022 whilst availability has increased to 710,000 sq ft due to new schemes completing. With Logged demand (6.1 million sq ft over the past 12 months) far outweighing availability, rents should remain stable.
In Sutton, Epsom, Chessington and Leatherhead, rents have also risen slightly from £17.50 per sq ft in 2023 to £18 per sq ft. Although take up is low so far this year at 27,000 sq ft, logged demand is far outweighing the available space (540,000 sq ft / 150,000 sq ft), so we should see that figure rising and rents remaining positive for the area.
Redhill and Reigate take up has leapt from 48,000 sq ft in 2022 to 101,600 sq ft so far in 2023 and rents have reflected this achieving £18 per sq ft, a big leap from £13.95 per sq ft in 2022. There remains a very high demand at 1.1 million sq ft logged, with only 68,500 available. Vamos Invest's Saltwhistle Business Park in Redhill secured its first tenant before completion earlier this year with good interest in the remainder of the c. 25,000 sq ft space.
Take up in Burgess Hill and Haywards Heath remains level, with 62,000 sq ft let so far this year (128,000 sq ft in total in 2022), with rents increasing from £13.25 in 2022 to £14.50 per sq ft at the end of H1 2023. Logged demand remains very high at 2.3 million sq ft and availability remains very low at 75,250 sq ft. This available space includes Sussex Junction, Burgess Hill, with just one self-contained unit of 46,500 sq ft remaining available at £14.50 per sq ft, accounting for more than half the total availability in the area, with good occupier interest being shown.
In Crawley and Gatwick, rents have also increased slightly from £16.50 per sq ft in 2022 to £16.75 at the halfway point this year. Demand is still outweighing availability at 3 to 1, however take up so far this year has been relatively slow with just 101,000 sq ft let, compared with a total of 350,000 sq ft in 2022. To help meet the 3 million sq ft + of logged demand over the past 12 months, a number of new build schemes are now on the market to let, including the two units totalling 235,700 sq ft at The Base, plus 65,000 and 18,800 sq ft at Arrow Point, both in Crawley.
Rental levels in Horsham have also risen from £12.50 per sq ft in 2022 to £14.25 per sq ft and highest quoting rents are up to £16 per sq ft. However of the 66,000 sq ft available, only 6,250 sq ft has been let so far this year. Demand remains sky high at a logged 2.7 million sq ft. Billingshurst Business Park, proposing 150,000 sq ft, would provide much needed new business space for the area.
In Bognor & Chichester rents have remained stable at £12.50 per sq ft. Again, demand is extremely high at almost 3.5 million sq ft required. As such, take up has already far exceeded 2022 levels at 52,500 sq ft (compared with a total of 20,600 in 2022), however availability is still very low at 80,000 sq ft, demonstrating the continued need for new and refurbished industrial space.
On the Sussex Coast, in Brighton, rents for sub 5,000 sq ft units have risen to £18.50 per sq ft, with rents for units of over 5,000 sq ft taking a while to catch up. Take up is encouraging at more than half last year's figures so far in 2023 (42,750 sq ft for 2023 so far / 75,000 sq ft for 2022), however only 52,000 sq ft remains available and there is still over 2 million sq ft of logged demand. Panattoni Park Brighton, Shoreham Airport is progressing to provide a total of 268,000 sq ft of new space for availability in Q2 2024. Units 4 and 5 Brighton Works, Brighton offer a rare opportunity for immediately available warehouse/trade unit space totalling 17.630 sq ft.
In Eastbourne and the surrounding areas rents remain at £12.50 per sq ft and with only 185,000 sq ft of immediately available space, take up is only at 25,500 sq ft this year (total 89,000 sq ft in 2022). But again, demand remains extremely high at 2.25 million sq ft.
In Hastings, St Leonards and Bexhill, rents have jumped slightly to £9 per sq ft (£8.50 in 2022). Take up is relatively low at only 11,000 sq ft let so far this year. Again, logged demand far outweighs availability at almost 2.4 million, compared with 179,000 sq ft available, including 109,083 sq ft at Ivyhouse Lane in Hastings.
Lewes, Newhaven and Peacehaven rental levels have increased from £11.50 per sq ft in 2022 to £12.50 per sq ft. Take up is at 10,000 sq ft so far this year (compare with a total of 31,000 sq ft in 2022) and demand is logged at 240,000 sq ft, compared with current availability of 91,000 sq ft.
In Rustington & Littlehampton, rents are level with 2022 at £12.50 per sq ft. Take up has already matched 2022 levels with 24,000 sq ft let so far this year. Demand is logged at 780,000 sq ft, with continue low availability of 70,500 sq ft.
In Worthing, like most of the South East regions, rents have also increased from £11.50 to £12 per sq ft. Take up is at just 5,500 sq ft so far this year and logged demand is a high 1 million sq ft compared with availability of 274,000 sq ft. And finally in Shoreham & Lancing, rents remain static at £14.50 per sq ft. Most of the available space at has snapped up with 44,300 sq ft let this year and only 15,000 sq ft available and demand remains high at r 540,000 sq ft.
Tim adds: "Due to investment yields softening, developers are having to reprice land purchases in order to make appraisals stack up, but many speculative newbuild schemes are still continuing at pace in locations with low supply. Of these, ESG and particularly, strong green credentials are a must for new development."