New stock is desperately required in the sub 100,000 sq ft Northamptonshire industrial market. Since the turn of the year and even more so since the election, the lack of good quality industrial space is becoming increasingly apparent, with the deals done far outstripping the supply of new stock.
2015 has seen the strongest first half of the year since the recession and with this rebalancing of the market, comes the obvious change in the terms now being offered by those landlords who do still have space available. Rents have been gradually increasing over the last 18 months, but they have risen more significantly since the turn of the year. Secondary rents have risen from circa £4.25 psf in 2013 to approx £5 psf in the current market. Grade A rents have moved on from circa £5.75 psf to in excess of £6.50 psf in the same period.
The other noticeable and perhaps more dramatic change is the level of incentives now being offered to tenants. Whereas 2 years ago they had the pick of the market and landlords showering them with reduced rents and rent free incentives, a tenant is now only likely to get circa 3-4 months rent free for a 5 year lease.
So where is the new stock going to come from? The bulk of the new development going on in Northamptonshire is for large ‘supersheds’ which understandably offer more efficient returns for the developers but equally causes to further constrict the opportunity for smaller stock even further. We are however starting to see some encouraging signs.
In Wellingborough, Ogee Business Park which has sat dormant whilst the landlords explored planning, now has contractors on site building the first of several anticipated pre let and pre sale deals, which we hope will lead to the rest of the site being speculatively built. Also in Wellingborough, Stanton Cross has begun, which will include the development of 100 acres of employment land. In Northampton, Gateway 45 at Crow Lane has also been earmarked for a mixed scheme of sub 40,000 sq ft industrial units.
As well as these new developments, we are also encouraged to see landlord’s increasingly willing to invest time and money refurbishing existing stock. Improving returns mean that this initial outlay can be increasingly justified and in turn, tenants are benefitting from a better product.
To learn more about the changing market, to discuss your property requirements, landlord or tenant then please do not hesitate to contact us on 01604 620616.