In conjunction with the opening of our Bristol office, the latest in our regionalised series focuses on the South West and South Wales.
Chancerygate’s development director Rupert Joseland, who heads up the Bristol office, shares his thoughts on the current industrial property market and how the business looks to use its national presence to create a strong foothold in the region.
The appetite for industrial remains high in the South West
In common with the rest of the UK, the global pandemic and implications of Brexit have accelerated the growth of the industrial property market within the South West and South Wales.
However, this growth and seemingly insatiable demand from occupiers has driven availability of high-quality industrial space in the region to record lows. The provision of new Grade A industrial and warehousing units in the region is imperative to enable occupier demand to be satisfied.
Bristol has traditionally been viewed as the South West’s industrial hub, however other areas in the region are now increasingly important in the marketplace. We are seeing occupiers placing greater importance on immediate availability of (particularly Grade A) accommodation and proximity to workforce and this has driven this expansion in the region’s industrial market.
Expanding our regional footprint
The opening of the Bristol office offers the opportunity for Chancerygate to increase our presence in and strengthen our foothold within the South West and South Wales.
We already have a strong reputation in the region for producing high-quality multi-unit industrial estates, having successfully delivered more than 568,000 sq ft of Grade A industrial space across five developments in the South West in the past three years. These developments have a combined gross development value of £76m.
The presence of our new office will give us the ability to grow our geographical reach and enable us to actively pursue opportunities which arise in towns and cities ranging from Worcester down to Plymouth and from Swansea across to Swindon.
Our focus is on developing in locations across the region where there is a shortage of modern, Grade A industrial accommodation for small and mid-size businesses. Our model delivers speculatively built accommodation into markets where demand is strong for urban logistics in multi-unit schemes, alongside trade counter opportunities.
This is evidenced by our two recent developments in Bristol, Vertex Park and Warmley Business Park, which have proved very popular with occupiers.
A regional market going from strength to strength
There is already a strong and prospering industrial market across the South West and South Wales. This has benefited recently from an overspill of demand from the South East where supply of stock cannot meet demand forcing occupiers to look further afield for occupational solutions.
The growth of e-commerce has hugely impacted on the logistics market, driving the need to change distribution patterns and quantum of warehousing accommodation.
This can be evidenced by e-commerce order fulfilment and storage provider Huboo, which has rapidly expanded since its launch in 2017.
The company supports e-commerce businesses by storing, packing and delivering online orders on their behalf, which differs greatly to the traditional distribution patterns. Rather than e-commerce businesses needing accommodation for their storage and distribution requirements, they can pass this onto Huboo to handle the process at its warehouse.
Huboo currently has two industrial units at our Vertex Park development in Bristol for its fulfilment operations. It also has three further premises across the city for its office, storage and fulfilment requirements.
This explosion in ecommerce has required retailers and logistics companies to review and expand their portfolios which, alongside strong demand from more traditional occupiers is positively impacting the South West industrial market, a trend which we anticipate will be sustained in the long term.
A healthy land supply is required
One of the challenges with looking for speculative development opportunities within the region is sourcing suitable land which meets our requirements.
Large scale development is coming forward in key locations such as Bristol Severnside, the future redevelopment of the Honda factory in Swindon and at junction 12 of the M5, by Gloucester.
These sites will cater for the large regional distribution centres, but demand remains across the region for multi-unit schemes, as demonstrated by the success of more recent Chancerygate developments at Furlong Business Park, Bishops Cleeve and Festival Trade Park, Cheltenham. However, in many towns and cities within the South West, there is a limited supply of land suitable for smaller unit development in urban locations and strong competition from other uses (such as residential).
We need local authorities to ensure that employment land is protected and sufficient land is allocated in the local planning process to address the increased demand for space from occupiers.
Burgeoning a reputation for the South West’s go-to industrial developer
Chancerygate has a nationwide reputation for delivering high-quality multi-unit industrial developments, and we will be building on that reputation to further increase our presence within the South West region and grow the number of sites we are developing.
Our new Bristol office will allow us to have a local ‘on the ground’ presence when it comes to sourcing and securing new opportunities. We have the funds available to act decisively to quickly secure opportunities and speculatively develop our Grade-A urban logistics schemes. We will also be able to widen our geographical remit and we are excited by the opportunities we will be able to pursue further into the south west and Wales.
We fully intend to grow the size of our Bristol office as our pipeline grows and will be looking to recruit ambitious, high performing property professionals for both development and project management roles in due course.
An insight from the agents
We spoke with Tom Watkins, director of industrial and logistics at Colliers about the industrial property market in the South West and South Wales and where the key growth areas will be moving forward.
Discussing the current market situation, Tom said: “The South West is facing the same problem as other regions across the UK, with the availability of land and supply of stock being a challenge for both developers and occupiers.
“The proliferation of e-tail and demand in particular from manufacturing and food businesses has meant the region’s industrial market has proven resilient growing during the pandemic. However, we are now seeing demand for space which cannot be satisfied due to diminished stock levels.
“In Bristol, supply levels are as low as two per cent, and across the region new-build industrial developments are being fully let either before completion or just after practical completion.
“Although Bristol has historically been seen as the industrial hub of the South West, the likes of Exeter, Gloucester and Swindon have grown in market importance. These locations are burgeoning markets of their own and should no longer just be regarded as satellite cities.
“Alongside these, Bridgewater, Newport and Plymouth have also become growth markets and I expect this trend to continue in the coming months.”
“Occupiers are becoming more footloose in the region when it comes to operational locations. We’re seeing factors such as stock availability, labour and accessibility playing a significant role within the decision-making process.”
“Moving forward, I fully expect to see the demand for small and mid-sized industrial stock to continue. Supply chains are evolving, and industrial and commercial property will play an integral role in these further developing in the years to come.”
For more details on how we can help with your requirements, contact Rupert Joseland on t: 07714 679 142 or e: rjoseland@chancerygate.com.
