Business News

Demand still strong for South West business parks, though availability at its lowest for five years

GVA Grimley’s bi-annual Business Parks Review: Spring 2008, suggests that in spite of economic uncertainties, the sub market sector of business parks is in good shape. The report details healthy levels of occupational demand across the UK which has contributed to a record year for take-up in 2007 with take-up totalling 546,000 sq m across the UK.

However, take-up in the South West region in the six months to December 2007 was 22,900 sq m, 11 per cent down on the previous six months. Yet it was still above the five year, six-monthly average of 19,000 sq m. The majority of space was let at Gloucester Business Park and Kembrey Park in Swindon.

Demand has remained strong in key locations across the region, such as Windmill Hill in Swindon, Gloucester Business Park and Aztec West in Bristol. The majority of requirements continue to be from financial services, Government headquarter relocations and defence. There’s also continued interest in small unit schemes, whereas secondary stock is more difficult to let.

In the second six months of 2007, the amount of space under construction in the South West fell from 34,500 sq m to 14,100 sq m. 79 per cent of the space under construction was speculative, with the largest amount of building activity at Gloucester Business Park and Emersons Green. This reflects the national trend, which as highlighted in the Report, sees a reduction in the proportion of space being built speculatively, down from 72 per cent at the end of 2006, to 62 per cent at the end of 2007.

The second half of 2007 also recorded the lowest level of availability in the South West for five years at 20,200 sq m. Similarly there has been a steep drop in the vacancy rate to 3.6 per cent, the lowest rate of all the regions and compares to 11.2 per cent three years ago. By floorspace, the greatest amount of availability was at Waterwells Business Park in Gloucester (5,600sq m) and Gloucester Business Park and Olympus Business Park (2,800 sq m each). Conversely, elsewhere, record amounts of availability were recorded in the Midlands, Scotland and North West with the UK vacancy rate down to 12.4 per cent compared to a high of 15.3 per cent in June 2004.

Prime out of town rents in the South West have risen marginally by 0.3 per cent over the past six months by 0.3 per cent, but by 4.9 per cent during 2007. Out of town prime rents ended 2007 at £253 psm (£23.50 psf) in Bristol, £199 psm (£18.50 psf) in Swindon, £183 psm (£17 psf) in Exeter, and £153 psm (£14.25 psf ) in Plymouth. Ben O’Connor, regional head of office agency at GVA Grimley incorporating Osmond Tricks in Bristol commented: “Given the current economic climate you would expect a sub sector market such as business parks to struggle. However the outlook is positive with healthy levels of demand and robust rental growth. We are forecasting national rental growth of 2.9 per cent in 2008 and averaging 2.5 per cent pa over the next four years.”

 

 

ff,

Coventry, Croydon,