Take-up has already surpassed long-term annual average by 27%
Huntworth Business Park in Bridgwater, where Savills is advising Howard Tenens on the disposal of 112,558 sq ft.
The South West and Wales have experienced significant investment in recent months, notably being selected as future sites for gigafactories. This development has attracted interest from numerous smaller businesses. Combined with the revival of data centres and unconventional warehouse occupiers, this trend is expected to significantly reduce supply in the near future
Rob Cleeves, Director, Bristol
Supply
Supply has risen 22% in the last twelve months to stand at 6.15m sq ft. That being said, Savills notes we have passed the peak supply of c.8m sq ft recorded in March this year. Of the current supply, 2.32m sq ft, or 38%, is located in Wales, while 3.83m sq ft, or 62%, is in the South West. Based on the five-year annual average take-up, this equates to 1.73 years’ worth of supply in the wider market. The largest unit available is the former Wilko Distribution Centre in Caldicot, comprising 920,000 sq ft. Notably, 29% of the current supply is concentrated in two units, each over 500,000 sq ft.
Regarding quality, 38% of the available space is Grade A speculatively developed, 4% is second-hand Grade A, 9% is Grade B, and 49% is Grade C. In terms of unit count, there are eleven units available in the 100,000–200,000 sq ft size band, six units in the 200,000–300,000 sq ft band, three units in the 300,000–400,000 sq ft band, one unit in the 400,000–500,000 sq ft band, and two units over 500,000 sq ft.
The resurgence of occupier interest in the region, primarily driven by its relative affordability, higher supply, and favourable demographic conditions, has led to a significant portion of the supply being placed under offer. Currently, 42% of the supply is under offer, with the majority being good-quality space. These transactions are set to close imminently, which would reduce the vacancy rate to 2.9%.
Take-up
Take-up in the South West and Wales has already surpassed the long-term annual average by 27%, totalling 3.28m sq ft across eleven transactions. Typically, the region sees 2.57m sq ft transacted across eleven units annually. Interestingly, the majority of this activity has been in Wales, which has accounted for 66% of the transactions, while the South West has accounted for 34%. In terms of specifications, 78% of the space transacted this year has been second-hand, 15% has been BTS, and 7% has been speculatively developed. Historically, the long-term average shows that 53% of space transacted annually is second-hand, 38% is BTS, and the remainder is speculatively developed. This shift has primarily been driven by the lack of new developments coming forward.
Analysing take-up by deal count for H1 2024 shows six transactions within the 100,000–200,000 sq ft size band, four within the 200,000–300,000 sq ft size band, and one over 500,000 sq ft. Annually, the region typically sees seven transactions in the 100,000–200,000 sq ft size band, three in the 200,000–300,000 sq ft size band, one in the 300,000–400,000 sq ft size band, and one over 500,000 sq ft. The other sector, which consists of the likes of data centres and film studios has accounted for 73% of activity in 2024, and the 3PL sector 17%. The remainder were taken by manufacturing firms and parcel companies.
Development pipeline
There are currently three units being speculatively developed within the wider region, one within the 100,000–200,000 sq ft size band and two in the 200,000–300,000 sq ft size band.