Take up of large industrial property in Wales fell sharply in the third quarter (Q3) of this year, according to new research from global property consultancy Knight Frank.
The level of activity for industrial space over 50,000 sq ft was 342,000 sq ft, compared with the 680,000 sq ft in Q2. However, some 1.35 million sq ft has been transacted so far this year - similar to the level in 2023.
The Q3 take up comprised five transactions, all of which were leasehold deals, with three in south Wales and two in the north.
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Neil Francis, head of Knight Frank’s logistics and industrial team in Cardiff, said: “The largest transaction of the quarter was a letting of 77,000 sq ft at the South Wales Distribution Centre, located at the Kenfig Industrial Estate, to Roche Logistics. This deal means that Mileway has now fully let the estate.
“Take up was significantly down on both last quarter and the same time last year and the general sentiment is that the market slowed due to the election and a quieter summer as a result.
“Also, increased due diligence is leading to transactions taking longer to complete with both occupiers and lenders seemingly being more cautious. This is adding months to deal timelines and is not only an issue for 50,000 sq ft plus industrial properties.”
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“On a positive note, we are seeing headline rents for prime space continue to increase. The final 42,000 sq ft unit on phase 3, Indurent Park, Newport, has been let for a new estate headline rent.”
Knight Frank’s research also shows that level of large industrial units in Wales stood at approximately 5.2 million sq ft, the same as for the previous quarter. Of that space, 16% comprises the 850,000 sq ft former Wilko distribution centre in Magor.
Mr Francis said: “Grade A space is still limited and of the available large units in South Wales, both the 52,000 sq ft RYB 1 at Ebbw Vale and the 105,000 sq ft Unit 10 at Indurent Park, Newport, are under offer and due to complete in Q4.
“Looking ahead, the Avara Foods site in Abergavenny has also been launched to the market. This 125,000 sq ft facility benefits from generous expansion potential and it has attracted strong interest from both occupiers and investors. Best bids were invited and it will sell for well over the guide price, a reflection of the continued demand for well-located freehold properties that offer the opportunity to sub divide, refurbish and develop.”
On secondary industrial stock, Mr Francis said there is a shortage of good quality space close to the M4.
He added: “Those landlords that have refurbished their units to a high standard are witnessing good levels of demand whereas poorer quality units, within secondary locations, are starting to see the interest and rents decrease.”