It’s time to put speculative warehouse development back on the agenda, according to agents CB Richard Ellis.
Investor interest in UK industrial property has been increasing reflecting the fact that returns increased by 1.2 per cent in January 2010 as compared to figures recorded in December 2009.
Paul Farrow, head of UK industrial agency at CBRE, said: “Occupiers who had previously placed property strategies on hold are beginning to take action and acquire new space. However, this will have the effect of further reducing supply levels and, when coupled with a lack of speculative development, it will inevitably lead to under supply in a number of prominent industrial locations across the UK.
“Developers are more likely to develop new schemes on existing land banks rather than buy new sites. This will act to further exacerbate any potential undersupply that may emerge during 2010 and until there is a marked improvement in the availability of development finance and proof of a sustained demand within the wider occupational market.
“We believe that the first developers to make the commitment to speculatively develop will find considerable success due to the lack of new product on the market,” said Farrow.