Pooks Commercial Property Consultants of Shrewsbury report an interesting year in the local industrial property market, which started with an air of "cautious optimism" as a number of new schemes were announced across the area.
The worsening international economic situation, however, has resulted in an increasingly restricted outlook by business generally and by the year end most development schemes had been put "on hold" with funding for speculative construction completely disappearing.
Nevertheless, there are still deals happening and the fact that many companies are renewing leases on factory and warehouse units gives encouragement to the sector.
Wem Industrial Estate in North Shropshire changed hands for the first time in many years and the new owners, Dencora Securities, have embarked on a programme of investment and improvement with a flexible policy concerning disposals so that there are now opportunities on this 60 acre estate to buy existing units for owner occupation or investment or land for individual development. Pooks have been appointed as letting/selling agents for Dencora. At prices of £95,000 for a typical 3,500 sq ft unit or £100,000/acre for development land, the Estate is very competitively priced compared to other parts of the county.
At Leominster Enterprise Park there has been continued success over the course of the year, with Evans Easyspace, Leo Pest Control, II Ice Refrigeration, etc. all acquiring land and building new units. At the time of writing there are firm enquiries from a number of concerns totalling about 8 acres on this 30-acre scheme. Land prices are at around £145,000/acre.
In Shrewsbury new development is concentrated on quasi retail trade counter units rather than factory space. At Vanguard Trade Park, for pension fund investors, Pooks are currently offering 3 units to let at rents from £10,950 pa each. At Battlefield Enterprise Park developers PXP West Midland Partnership have had a change of direction to concentrate on larger single users, rather than a speculative small unit food enterprise park scheme and to date this has produced about 70,000 sq ft of current enquiries from 3 concerns.
Shropshire County Council’s food business incubation centre is nearing completion, with reportedly good interest. The Council have released land for owner occupier individual development at Tern Valley, Market Drayton, although with prices at a reported £225,000/acre this is significantly more expensive than other locations.
Telford has the largest stock of existing industrial units in the County and here the market appears to have been fairly steady, with one or two very large disposals of around 100,000 sq ft. The rail freight project at Donnington is under way, which will provide facilities for handling 750,000 tonnes of freight a year. Atcham Business Park between Shrewsbury and Telford, with rents at around £4 per sq ft has also maintained steady progress, notwithstanding the closure of the nearby Allscott Sugar Beet Factory, which is currently being demolished.
At the close of the year, national "events" continue to challenge business development. The impact of business rates charges on empty property, the departure of major banks from the commercial property market, higher energy costs, the proposed Community Infrastructure Levy (in effect already in place in Herefordshire), local government re-organisation and the lack of power and broadband capacity in some locations are all contributory factors preventing a flexible market.
However, the industrial sector is currently considered to be more resilient than retail, office or residential property and 2009 may well be the year when it "keeps its head down" with a series of smaller transactions punctuated by some distress sales by receivers or national concerns restructuring their portfolios. In such situations there are plenty of opportunistic buyers who have maintained cash reserves for exactly this situation. With a significant "yield gap" between base rates and perceived returns, there will be some wonderful opportunities for investment in the coming year.
For further information contact:
Charles Howell, Partner at Pooks Commercial Property Consultants on 01743 276633.
26 Claremont Hill
Shrewsbury
SY1 1RE
Email: cth@pooks.co.uk
