Industrial Property Drives Forward

As we all know, industrial property – that we all refer to so affectionately to as ‘sheds’ – has seen a significant increase in investment over the last 12 months. The increased interest in the sector has been justified for multiple different reasons; in this article, I intend to highlight various sources and attempt to examine the reasons behind why ‘sheds’ have been the fastest growing industry property sector.

To state the increase has only been present for the last 12 months could be somewhat of an understatement. For instance, the Head of Research at Lambert Smith Hampton, Oliver Sautoy, released figures showing how well the industrial and logistics sector performed back in H1 2015, reaching a level of £3.05bn in investment volume. This was actually the third largest half-year result since 2007, meaning that the increase in inward investment into industrial premises began nearly three years ago.

The reasons why? Many have put the recent surge down to the result of the European Referendum. The result has caused a remarkable decrease in the value of sterling, resulting in British goods appearing cheaper in terms of foreign currency; this has led to British companies taking advantage and choosing to acquire more industrial space and producing more goods for exportation.

The continuous increase in online shopping over recent years is also heavily benefitting the industrial sector as retailers need industrial space to manufacture and store their goods. The UK has also seen a big growth in automotive manufacturing, reaching a 17 year high in January this year!

All of these factors will be having a strong influence on the demand for industrial space. However, this has led to concerns that there isn’t enough industrial space left in the UK for future expansion – a concern I am sure developers and construction teams will address!

How significant has the increase been? RICS released some interesting facts and figures on the industrial property sector which show exactly how significant and market dominating it has been. A national survey they carried out earlier this year showed 28% of respondents had seen an increase in demand for industrial property in Q1 2017. Results displayed industrial outperformed both retail and office; resulting in industrial being the most sought after sector by investors.

As a company, we have seen an increased demand for industrial-led surveyors. Most recently we assisted an industrial fund based in Yorkshire on a requirement for an Asset Manager. The Fund has seen their industrial portfolio spread to over 3.5million sq ft nationally, a significant increase upon their previous standing.

As the political uncertainty continues and the retail and manufacturing trends continue to rise, the industrial property sector is remaining very buoyant – I’m looking forward to watching the rest of the year unfold and how the dynamic of the property sector may change.