Supply

The supply of units over 100,000 sq ft in the region currently stands at 2.62m sq ft across 14 units. Closer analysis highlights that 42% of the current supply is located within Wales, and 58% is within the wider South West region. The vacancy rate in the wider region now stands at 5.89%, according to the three-year annual average, this equates to just 0.94 years’ worth of supply.

The quality balance is heavily skewed towards lower-quality units, with just 22% of available space classed as Grade A, 52% is Grade B and 26% is Grade C. Now, the lack of good quality stock has left occupiers no choice but to commit to speculatively developed units before they reach practical completion or head down the built-to-suit route.

By unit count, 57% are within the 100,000–200,000 sq ft size band, 29% are within the 200,000–300,000 sq ft size band and 14% are within the 300,000–400,000 sq ft size band.

Due to the rising rents seen within the region, we are witnessing rising occupier demand for units further within Wales.

Take-up

Take-up in the South West and Wales market has totalled 3.49m sq ft across 15 units which is already 37% above the long-term annual average seen within the region. So far in 2022, transactions have centred around better quality units, with 50% of space transacted being built-to-suit. In terms of Grade, 65% of space transacted has been Grade A, 18% has been Grade B, and 17% has been Grade C space. The supply is hindering take-up as occupier requirements centre around new, modern units.

In terms of unit size, by deal count, 73% of transactions have been within the 100,000–200,000 sq ft size band, 20% have been within the 200,000–300,000 sq ft size band, and 7% have been over 500,000 sq ft.

In 2022, 56% of space transacted has been from online retailers, this was followed by 3PLs accounting for 14% and the other sector which accounted for 14%. The region, due to its infrastructure and cheaper land values has attracted a diverse array of occupiers including the likes of vertical farms.

Development pipeline

There is just c.113,000 sq ft under construction through a single unit within the region. However, developers are indeed responding to the rising occupier demand, and Savills is tracking twelve units in various stages of the planning process that could start development imminently.

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