It is unlikely that there will be sufficient prime space available to meet demand in 2011 according to Lambert Smith Hampton’s latest research the National Industrial and Distribution Report 2011.
The report notes that the amount of industrial space acquired in 2010 increased by 18.5 per cent on the previous year to 101.2 million sq ft – reaching a five year high.
Increased demand was focused on prime space yet, due to a lack of speculative development in previous years, grade A space was limited and quickly absorbed.
Key areas where the shortage of supply is likely to be greatest include the East Midlands, Eastern Region, Greater London and the South East.
The research found that take-up in the distribution sector increased by 46 per cent on the previous year for units in excess of 100,000 sq ft, to 30.4 million sq ft. Demand emanated mainly from the retail arena but was also boosted by demand from the manufacturing and waste sectors.
Michael Alderton of Lambert Smith Hampton said: “Developers have already responded to this [shortage] by becoming active in strategic land buying throughout the year, with an expected return to speculative development in late 2011/early 2012, where demand is strong and space shortage most acute.”
Despite demand reaching a five year high, availability rose to 372 million sq ft, an increase of 17 per cent on 2009. This figure gives a distorted impression, as much of the stock returning to the market is obsolete, lower quality and unwanted stock.