DEMAND for commercial industrial units increased in 2010 to a five-year high, despite the economic downturn, a report has revealed.
The amount of industrial space acquired in 2010 increased from 2009 by 18.5 per cent to 101.2m sq ft.
The demand was focused on prime space which, due to a lack of commercial property development during the credit crunch and recession, was limited.
Quality second-hand space accounted for 80 per cent of take-up in 2010.
The findings come from the latest research report, National Industrial and Distribution Report 2011, published by national commercial property consultancy, Lambert Smith Hampton.
Adrian Whitfield, director in LSH’s south coast industrial and logistics team, said: ‘As we progress through 2011 it is unlikely that sufficient prime space will be available to meet the increased demand in the market.
‘Developers have already responded to this by becoming active in strategic land-buying throughout the year, with an expected return to speculative development in late 2011 or early 2012, where demand is strong and space shortage most acute.’
The shortage of supply is likely to be greatest in the south east, as well as Greater London, the eastern region and the east midlands.
But despite demand reaching a five-year high, availability rose to 372m sq ft across the UK, an increase of 17 per cent on 2009.
LSH puts the reason down to much of the remaining stock being obsolete, lower quality and unwanted.
Jerry Vigus, director, added: ‘The south coast has experienced a good level of occupier activity in the last 12 months, with a number of high-profile transactions taking place.
‘In addition to the larger lettings there has been a consistent level of take-up throughout the year for smaller units.
‘This has led to a number of estates built in the last five years being fully let or sold, including Segensworth Business Centre and Own Your Own in Portsmouth.’
Robin Dickens, director at LSH’s Fareham office, concluded: ‘Due to the lack of availability, notably for bigger quality units along the M27 corridor, take-up rates for 2011 are likely to be lower than 2010.
‘Rents will remain static for the next 12 months but incentives and rent-free periods will reduce.
‘The opening of the Hindhead tunnel will have a positive impact for logistics companies, particularly in Portsmouth and south-east Hampshire.’