Will speculative industrial development in Wales meet growing demand?
A leading logistics expert has called for speculative industrial development in Wales to ensure that new demand created by scrapping the Severn crossing tolls is not constrained by a recent dramatic decline in space.
Latest data from global real estate advisor Colliers International shows that available industrial space in Wales has suffered a sharp drop in less than a decade, falling from 4.9 years in 2009 to 2.1 years in 2017.
Tim Davies, head of industrial & logistics in Wales for Colliers International, said the 57% decrease showed there is a need for logistics developers to build speculatively in Wales to address the severe shortage of industrial space – particularly following the announcement from the Government that tolls on the Severn crossings would be scrapped at the end of 2018.
Davies said: “Tolls on the Severn Bridges being removed is likely to increase demand from occupiers who have previously been deterred by the prohibitive bridge crossing costs. However, this demand will be coming in the wake of a dramatic reduction in available industrial space in Wales in recent years.
“If this situation is not addressed it will constrain potential business growth at a pivotal time. This represents an opportunity for logistics developers to build speculatively in Wales.”
UK industrial availability has fallen on average 62% since 2009, and industrial supply is likely to fall further due to continued demand from e-tailers, lower levels of speculative starts, and the loss of industrial commercial land for other uses such as residential.
Colliers International statistics show that despite the reduction in availability and supply, just 17 million sq ft of industrial space is under construction.
There has been a 60% decline in speculative completions since 2007, according to the data, with speculative industrial schemes now accounting for just 28% of all UK developments under construction. Colliers predicts that completions will fall by 60% in 2017, to 3.5 million sq ft.
The data also shows that industrial sector continues to attract strong investor interest, with investor volumes of £3.4 billion in the first half of 2017, exceeding the first half of 2016 by 13%.