Supply

Recent speculative completions along with multiple large units returning to the market has caused the level of supply to increase to 3.99 million sq ft across 17 separate units, a 17% rise from the beginning of the year. Imperial Park in Newport is the largest unit totalling 1.08 million sq ft, however, it is earmarked for reconfiguration into four smaller-sized units.

The quality balance is heavily skewed towards lower-quality units with just 18% of available space classed as Grade A down from 36% at the start of the year. Additionally, by unit count, the supply continues to be dominated by smaller units with 65% being within the 100,000–200,000 sq ft size band. There are three units available above 300,000 sq ft all of which are of second hand quality.

The supply looks likely to become scarce in the coming quarter as we track 502,000 sq ft, of Grade A space under offer along with the possible redevelopment of Imperial Park in Newport. This would bring the supply as low as 2.39 million sq ft giving a vacancy rate of 6.73%.

Take-up

Take-up in the South West and Wales market totalled 705,696 sq ft, a 23% increase from H1 2019 but is still 51% below the long-term H1 average. Adhering to regional trends, deal volumes have centred around the smaller size bands with all of the deals being within the 100,000–200,000 sq ft range. H1 2020 has seen occupier demand lean towards better quality space with 62% of space transacted being built-to-suit Grade A, the remaining space was second hand.

The removal of the tolls from the Severn Bridges has improved Wales as an option for occupiers through increased connectivity paired with lower property rents and land prices. Wales has historically accounted for on average 33% of take-up throughout the wider region; however in the past three years, this has reached an average of 47% per annum.

Development pipeline

There is currently a single unit under construction in the wider region at Unit 1 Chippenham Gateway where St Modwen are developing 106,200 sq ft set to reach practical completion in Q3 2020.

_{Read the articles within Big Shed Briefing below.}