ANOTHER RECORD YEAR FOR THE SOUTH EAST INDUSTRIAL MARKET
Continued strong demand and lack of stock across the industrial market made for another record year in the South East, in 2021, according to SHW in its latest Industrial & Logistics Focus report.
David Martin, SHW’s Partner and Head of Sussex Coast, comments: “We have seen a very healthy number of enquires and lettings for all unit sizes across the South East, with the areas showing lower take-up attributed to lack of stock rather than lack of demand.”
“This strong demand continues to be linked to logistics / B8 rather than B1 light industrial / B2 manufacturing, reflecting the continued appetite for online retailing and the subsequent last mile logistics. As a result, rents are continuing to rise across the board, and we predict this will largely continue throughout 2022. For occupiers, these rent hikes of 10-20% in some areas have forced some companies to relocate to more affordable locations.”
On the Sussex Coast, rents continue their upward trajectory in Brighton and Hove. At the start of 2022, £18.50 per sq ft has just been agreed in Hove, whilst the trade parks are at an even higher level. Availability has halved from 166,500 sq ft to 84,000 sq ft at the end of 2021 due to the increased take up to 87,500 sq ft in 2021. Take up could be even greater with more availability of stock as logged demand far outweighs the currently available stock levels.
Rental levels remained static in Bognor and Chichester at £11.25 per sq ft. A low level of take up was recorded at just 13,000 down from 82,383 sq ft in 2020 mainly due to low good quality stock. With just a 1.9% vacancy rate, 97,600 sq ft of availability currently and a massive 600,000 of logged demand in Q4 (1.68m sq ft in 2021) we will likely see rents rise in 2022.
In Eastbourne and the surrounding areas, rents jumped from £10 per sq ft in 2020 to £12, almost matching the highest quoting rent of £12.50 per sq ft. Take up also jumped almost 400% from 2020 levels to 288,000 sq ft in 2021. With 270,000 sq ft of logged demand in Q4 2021 (1.5m sq ft for 2021) and availability at 198,000 sq ft, we still predict rental increases due to the shortage of good quality stock.
In Hastings, St Leonards and Bexhill, take up increased over 450%, with rents remaining level at £8 per sq ft. Availability has increased at the start of 2022. In contrast, in Lewes, Newhaven and Peacehaven whilst rental levels remained at £11 per sq ft, £8.00 per sq ft and £9.25 per sq ft respectively, take up halved from 75,000 to 35,500 sq ft again due to severe shortages of decent quality stock. Vacancy remains very low at 1.7%, availability has increased to 85,000 sq ft at the beginning of 2022. With demand at 100,000 sq ft in Q4 (560,000 sq ft in total for 2021), we see rents reaching £13 per sq ft.
Similarly, with a very low vacancy rate of 0.4%, take up was down by 72% to 5,500 sq ft in 2021 and rental levels remained at £10 per sq ft in Rustington and Littlehampton, with 26,500 sq ft of current availability and 345,000 of logged demand in 2021.
In Worthing, while take up was down from 117,371 sq ft in 2020 to 42,000 sq ft in 2021, rents increased significantly from £9.25 to £11 per sq ft mostly down to lack of stock levels. Vacancy is at 11.7%, and availability at 322,000 sq ft, primarily down to a single building available of 260,000 sq ft, whilst demand in Q4 2021 was recorded at 530,000 sq ft (1.2m sq ft for 2021). Shoreham and Lancing also saw a rental increase to £9.50 per sq ft from £8.25 in 2020. Take up was up slightly from 43,792 to 54,500 sq ft, availability is currently recorded at 56,500 and a vacancy rate of 1.7%, however due to the low level of stock we see rents reaching £13.50 per sq ft.
David adds: “Vacancy levels for much of the South East remain low, with a demand for new industrial and logistics units, a number of developers have pushed the button on speculative new build schemes, despite a 20-30% increase in build costs, to capitalise on the strong demand and rental growth.”
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