Overview of the industrial property market

Market Overview News

The industrial property market in Nottingham and surrounding areas continues to prosper following what was for FHP in 2006 a record year.  Last year we acted in transactions on industrial property which totalled over 2.1 million ft² which easily surpassed the previous year of 1.25 million ft². 

The intense activity in the market last year is obviously partly a reflection of the demand for industrial space but also reflects the fact that developers have been speculatively developing large amounts of space in response to this demand. 

Over the last few years there has been little stock available of industrial buildings and this has led clients of this Practice to carry out a significant amount of speculative development in such locations as Willow Farm Business Park and Langham Park at Castle Donington, Gateway 28 and Park Lane Business Park at Sutton in Ashfield, Doncaster South at Harworth and the Newark Business Park.  As a result over 600,000 ft² of the total space transacted last year  was new build accommodation all bar 80,000 ft² of which was speculatively developed. 

The previous lack of availability of space coupled with increasing land costs and building costs has seen values soar over recent years which has seen rental values rise to £5.75 – £6 per ft² per annum and capital values of up to £80 per ft². 

Notable deals include the sale on behalf of Claremont Property Holdings Limited of Doncaster South to Rreef Limited, a subsidiary of Deutsch Bank.  This brand new high bay warehouse in the north of Nottinghamshire is the largest ever speculatively developed building in the county and reflects the burgeoning market for high bay warehousing in the A1 as well as the M1 corridors. 

The first quarter of 2007 has seen no slackening in the market although the recent interest rises will probably lead to the capital values for smaller freehold buildings stabilising after a number of years of good growth. 

One of the interesting trends over recent years, which we are encouraging our clients to capitalise upon, is the spread of the high bay warehousing market, which has been driven in the main, by the strong retail market over the last decade.  We are currently marketing a number of opportunities which include existing buildings at Grantham 334 (334,000 ft²), the Nucleus at Nottingham (130,000 ft²), Sutton in Ashfield (95,000 ft²) and sites where proposals are well advanced for speculative development at Gateway 28, Sutton in Ashfield (300,000 ft²), East Midlands Distribution Centre, Castle Donington (270,000 ft²) and The Core, Chesterfield (170,000 ft²). 

We are also acting on sites where we would be happy to satisfy any large warehousing requirements on a design and build basis at East Midlands Distribution Centre (up to 1 million ft²), Harworth near Doncaster (up to 500,000 ft²) and Castlewood on Junction 28 of the M1 (up to 500,000 ft²). 

Whilst this market has undoubtedly been driven by the retailers it should be noted that over three quarters of all new space taken in these high bay warehouses are replacing older buildings which are typically smaller with lower eaves heights and as such it looks like this market may well run for some time.