London will be the bright spot in a challenging industrial property market, according to research by Jones Lang LaSalle.
JLL’s UK Industrial Property Trends Today predicts that total industrial market take-up in 2011 will undershoot the level recorded in 2010 by around 13 per cent in floorspace terms and demand is expected to remain suppressed in 2012, although certain sectors of the market still have active requirements.
Reflecting market demand and supply conditions, the report predicts that a number of locations will see some rental growth next year, mainly in and around London.
Andy Harding director, national industrial & logistics said; “Despite the tough conditions, the South East has continued to perform relatively well with take-up in 2011 projected to outperform 2010.š As always there are hot and cold spots of activity, but within areas of strong take-up there is compelling justification for speculative development, although site availability is limited.”
Total industrial floorspace availability declined in Q3 2011 to stand at 335.0 million sq ft at the end of September, 1.8 per cent lower than at mid-2011. Availability in units below 100,000 sq ft stood at 248.1 million, down 1.3 per cent on mid-2011. Availability in large industrial and distribution properties fell by 3.5 per cent to 86.9 million sq ft.
With speculative development is set to remain limited in 2012, the report predicts that good quality available supply is likely to diminish as take-up exceeds replenishment. But poorer quality available stock could increase due to weak take-up and business failures.