Wales currently has no available large grade A industrial space for occupancy which will impact deal flow this year, after take up rose to 2.2 million sq ft in 2024.
Research from property advisory firm Knight Frank, based on an analysis of deals for industrial property of over 50,000 sq ft, shows take up was more than a fifth up on the 1.8 million sq ft reported for 2023.
Some 10 deals totalling 850,000 sq ft were transacted in final quarter of 2024, compared with 420,000 sq ft in Q4 2023. The deals consisted of six leasehold and four freehold. The strong deal flow means that is current no grade A industrial space available for let in Wales.
Neil Francis, head of logistics and industrial at Knight Frank in Cardiff, said:“It was satisfying to see the final quarter of 2024 show an upturn in deals for larger industrial properties and this led to an improved year overall for the Welsh industrial property market.
“The most successful development of the new space has been at Indurent Park (formerly St Modwen) at Llanwern, where over the past three years the company has constructed nine units from 15,000 sq ft to 110,000 sq ft, taking the speculative total build to over 600,000 sq ft.
“The first letting on phases three and four secured a headline rent of £8.50 per sq ft and gradually, deal by deal, this has increased to the point where the latest letting achieved was at £9.75 per sq ft.
"Plans are being drawn up for phase five and it is hoped that 2025 will see more speculative development on this popular estate.”
The research shows that the only other speculatively developed ‘mid-box’ unit in Wales in the past year was the 52,000 sq ft RYB 1 in Ebbw Vale. Constructed by the Welsh Government, it has now been let to engineering firm Halton Flamgard which has agreed a 10-year lease at £6.50 per sq ft, surpassing any rental in the area. Halton Flamgard, which will relocate from smaller premises in Pontypool, said the move will allow it more than double its current head count to 168.
Mr Francis “We have also witnessed a number of pre-lets in the past 12 months. These are generally rare in the region, but such is the lack of grade A space that developers like Robert Hitchins and London Metric have been able to offer attractive packages to occupiers to secure long-term lettings.
“Hitchins started this with a 20,000 sq ft letting to builders merchant MKM at its Central Park site in Bridgend Industrial Estate and rapidly followed up with a bespoke offering to Evri for a 82,000 sq ft dock-levelled industrial facility with a larger than standard yard area.”
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The Knight Frank report also shows that London Metric secured a pre-let to the Alliance Automotive Group for a new 35,000 sq ft distribution unit at Axis 32, Coryton.
Mr Francis said:“Arguably this site is one of the best located in South Wales being on the M4/A470 junction and being able to service much of the region in under an hour.
“London Metric adapted the scheme to suit the occupier and the rent agreed is over £11 per sq ft, which will set a new headline that I am hoping will trigger confidence for more speculative development.
“It is also worth noting in terms of availability that 2024 saw 2.5 million sq ft of industrial space in Ford, Bridgend and Wilko, Magor removed from the availability, but not included in the take up stats as both sites are being redeveloped for data centre usage.
“Wales currently has 32 units totalling just under 4 million sq ft available – but none of this is Grade A space.
“This lack of grade A space will impact take up in 2025. As a result, we will see owners of second-hand stock who are willing to refurbish reap the rewards of increased rents. We also expect an increase in pre-let activity, with occupiers willing to wait for a new-build unit that suits their requirements.”
