By 2022, online retailing is forecast to account for 19% of the total retail sector
The industrial sector within Bedfordshire, Cambridgeshire, Hertfordshire and Peterborough remains strong due to increased occupier demand which has recently spiralled due to structural change within the logistics and retail sectors.
Take-up in the regions for units of over 100,000 sq ft has totalled 4,161,558 sq ft so far in 2018. Interestingly, 86% of take-up was based in Bedfordshire alone, compared with 3% in Peterborough, 0% in Cambridgeshire and 11% in Hertfordshire, highlighting Bedfordshire as an occupier favourite. In fact, take-up within the regions has historically been robust with the five-year annual average resting at 1,784,874 sq ft per year.
Figure 13 | Warehouse take-up by region
Source: Savills Research
By 2022 online retailing is forecast to account for 19% of the total retail sector. According to research undertaken by Prologis, an extra €1 billion spent online leads to an additional 770,000 sq ft of requirement for warehouse space, suggesting the appetite for industrial accommodation will only continue to increase.
As a consequence of strong levels of take-up, the region is experiencing a current supply shortage with less than 500,000 sq ft available across three units. These units include Huntingdon 252 in Cambridgeshire totalling 251,746 sq ft, Orton 130 in Peterborough totalling 129,099 sq ft and Building 2 G Park in Bedfordshire totalling 106,338 sq ft.
Consequently, due to all available units being below 300,000 sq ft there may be more opportunity to satisfy larger occupier requirements within the region.
Considering the current supply level, which stands at 487,183 sq ft and the five-year average annual take-up, there is 0.27 years left of supply within the regions, highlighting further opportunities for development.
There are currently four units totalling 947,000 sq ft being speculatively developed throughout the regions, which will helps alleviate some of the supply shortage. The largest of which is Bedford 405, in Bedfordshire, totalling 405,000 sq ft. 82.2% of the sq ft under construction is located within the Bedfordshire market, highlighting strong developer confidence.
Additionally, there are currently 22 sites throughout the regions allocated for future development, of which only six have been identified as developable in short term, suggesting more sites could be brought forward particularly as building sizes increase.
Furthermore, the conditions that the market is currently experiencing with an inherent lack of supply and increased occupational demand has pushed on rents. Taking data from forecasting house RealFor, we expect industrial rental growth across the region of at least 12% by 2022, reaching 14.3% in Bedford and as high as 20% in Cambridge and surrounds.