SPECULATIVE development of industrial units could make a long-awaited return in the south coast region this year, according to national commercial property consultancy Lambert Smith Hampton.
With the economy showing signs of recovery and the UK property investment market bouncing back to levels seen in 2007, the commercial property company believes the industrial and warehouse sector now has all the right ingredients to support speculative development projects.
LSH says it has already identified a shortage of quality modern detached industrial units more than 20,000sq ft.
There are currently only two units of over 30,000sq ft available along the M27 corridor between Southampton and Portsmouth that benefit from a self-contained secure yard.
Jerry Vigus, industrial and logistics director at LSH in Southampton, said: ‘It has been over five years since the south coast has seen any substantial speculative development.
‘With the lack of stock combined with potential rental growth and the forecasting for investment yields compressing, Lambert Smith Hampton believes that some UK institutions will now be identifying speculative development as an attractive option.
‘We have seen over the last 12 months the market showing signs of recovery with many UK institutions looking to invest in the south coast.
‘The shortage in supply is relevant to both Southampton and Portsmouth markets.
‘All eyes over the next 12 months will be on Test Lane South, Southampton, as well as Voyager Park and Merlin Park in Portsmouth, along with the 20 acres due to become available on the former Ford Transit van site.’
In 2013, there were a number of high-profile transactions which included Biffa taking a sub lease from DS Smith on Hounsdown Business Park, a unit of 125,000sq ft.
LSH is a national commercial property consultancy that works with groups across the public and private sectors.