Speculative construction across the industrial/warehouse sector came to a grinding halt almost a decade ago. With demand increasing and little available space, there has been a resurgence in the build progamme; Holloway Iliffe & Mitchell’s Tom Holloway gives an overview of the current developments.
The South Coast witnessed a cessation of pretty much all office and industrial construction in 2008. Ten years on this lack of new build has led to a major reduction in space, particularly in small and mid sized industrial units. However, the demand over the last 18 months from both investors and occupiers alike, has given some confidence to developers to begin to build again. For those that were bold, that has paid off. Speculative construction at Glenmore Business Park in Chichester which began in 2015 saw Phase I selling quickly, Phase II is now underway with some 50% of units already under offer.
A joint venture between East Hampshire District Council and Enterprise M3 LEP began a speculative build of a mixture of three office and industrial units on the old Ordnance Supply Unit site in Liphook. Practical Completion is due in the next few weeks and we have all three blocks now under offer.
Daedalus Park, Lee on the Solent is being developed by Tidebank. Once complete there will be 65 units totalling 135,000 sq ft. Located within the Solent Enterprise Zone, the first phase of 30 units across seven buildings were completed a year ago and have all been sold or let. Phase two is currently under construction with 31 of the 35 units reserved or under offer off plan.
Tom Holloway comments:
“Until recently, funding for speculative industrial construction has been very restricted as the focus has been on residential. The tide is beginning to change on the back of rising demand from both investment funds and occupiers. The lack of quality stock has also impacted the local market, but this is beginning to be corrected and positively reflected in headline rents, which are regularly reaching £9.50 per sq ft.”
On a bigger scale, there are three developments in Portsmouth, Havant and Waterlooville currently in the speculative build pipeline. Merlin Park, is being developed by Canmoor on behalf of British Airways Pension Fund. The 6.5 acre site on the Airport Industrial Estate is close to completion and will house the new investigation unit for Hampshire Police. Overall there will be 100,000 sq ft of employment space, the majority of which should be ready this summer.
LaSalle Investment Management has two speculative sites in the early stages of development. In Havant, Velocity will provide three mid sized industrial/warehouse units ranging in size from 25,500 to 45,000, two of which have been designed on the basis that they could be occupied as one or separately. Practical Completion is scheduled for the end of the year. The second site is Berewood in Waterlooville, acquired by LaSalle Investment Management on behalf of the Coal Board Pension Fund. The first phase of 150,000 sq ft in 5,000-20,000 sq ft units will start later this year.
Dunsbury Park, 45 acres located just off the A3 to the East of Waterlooville has seen Fat Face take up an 80,000 sq ft distribution and office complex and VW Breeze will move into its 12,800 sq ft van servicing and offices at the end of the year. A further 38,000 sq ft is also under construction, likely to be ready in the spring of 2019.
Tom Holloway adds:
“The South has lagged behind the other regions when it comes to speculative development, but it’s clear now that building, at least in the industrial sector, has restarted and we are encouraged by the positive outlook for the sector in the region.”