Takeup down 56 per cent across South East industrial market, finds SHW

Takeup has fallen 56 per cent in the first half of 2024 across the South East industrial market, according to the latest Industrial Focus from real estate advisers SHW.

But with 3.5 million sq ft of lease events now scheduled across the region, the next 12 to 18 months could show major improvement.

“Although the second half of the year usually records a higher level of takeup, this significant decrease is reflective of the uncertainty in the market – economically and politically – which has delayed many occupiers’ decisions on property moves,” said Tim Hardwicke, partner and head of agency at SHW.

“However, there’s a more positive outlook going forward.

“With a new government now in place and interest rates widely expected to decrease imminently, backed by the large number of lease events due over the next 18 months, we’re expecting transactions to increase, bringing take up back to an annual average.”

Takeup dropped 19 per cent in the core South London market, with Mid Sussex down 85 per cent, and Crawley and Gatwick down 79 per cent.

There were some exceptions across the region – for example, Brighton and Hove saw takeup rise 212 per cent.

Rents have remained static in most of the South East, again with a couple of exceptions.

Eastbourne, Hailsham and Polegate have seen rents increase from £12.50 to £12.75 per sq ft.

And in Hastings, St Leonards and Bexhill, rents have jumped from £9 per sq ft in 2023 to £10.50 per sq ft this year.

“There’s a raft of new Grade A, sustainable developments coming through over the next 12 months,” Tim added.

“These are in prime locations where supply of Grade A stock is low and subsequent transactions are likely to push rents to a new high.

“The importance of ESG continues to move up the list of significant considerations, both to occupiers and investors alike, and is starting to be a driving force for industrial activity.

“Increasingly high utility costs are making ‘green building’ with lower running costs even more attractive.”

New schemes becoming available include Phase 2 of Prologis Park Beddington, which will provide four new units totalling 90,000 sq ft this year, as well as GLI’s CR1 – on site now – and CR2, totalling 107,770 sq ft in Croydon.

Panattoni Park Brighton is also now available to occupy, providing multi-let units from 19,500 sq ft.

“In terms of investment and development, investment yields remain stable and are likely to remain so until interest rates start to reduce,” said Tim.

“But there are considerable funds waiting to be deployed whilst developer appetite for sites continues, in preparation for this expected economic boost.”