How to turn the south coast’s sheds green

In an area where development space is squeezed between two national parks and the sea, driving up rental values is pretty much the only game in town for anyone serious about growth. The way industrial developers and landlords on the south coast have responded to the challenge provides an object lesson not only in what the flight to quality looks like, but also in how the sector can deliver ESG in a way that goes beyond the E. “I started in industrial agency 14 years ago, and back then you would go to awards ceremonies and there would be very few women in the room, whereas now there are a lot more, which is really encouraging to see,” says Elise Evans, Lambert Smith Hampton’s director of industrial and logistics. Evans is confident that the improvement in stock over that time has had much to do with this – that the built environment itself can drive change. “Rather than hanging out in the rain on a 1970s multi-let estate at the back end of nowhere, you can find yourself in a highly energy-efficient grade-A office fit-out in a pretty nice, shiny shed.” East to west Evans was the South East’s top industrial dealmaker in the EG On-Demand Rankings in September, with five deals totalling 68,201 sq ft. Although it treats them as one, Lambert Smith Hampton has two south coast offices in close proximity, one in Southampton and the other in Fareham, which lies between the city and Portsmouth and is where Evans is based. Much like the fierce footballing rivalry between Southampton and Portsmouth, which endures despite the two only meeting once in the past 10 years, thanks to various quirks of history and geography it is actually rather rare for the industrial markets at each end of the M27 to mix. “We have two quite different markets,” Evans says. “Southampton is driven by the docks – one of the largest such sites the country – and therefore there is a lot of B8 activity with products and materials coming in. Then, when you move over to the eastern side, the landscape is a bit different. It’s driven by a skilled workforce, the MoD sectors, aerospace and some manufacturing – a lot of it related to marine industries, being coastal.” Regardless of location, environmental considerations have become all-pervasive. “We have an institutional client that has just carried out a full dilapidations refurbishment of a building, with the goal being to increase the EPC rating to an A. It carried out various works to help do that, one of which was putting solar panels on the roof. That is very common practice, and probably driven by the client’s own desire to build energy-efficient buildings or convert existing premises to improve energy efficiency, but also by tenants’ requirements. “We are finding that sustainability is a requirement not only of tenants but also of some of their customers. The accommodation that their contract is fulfilled through needs to reach a certain standard, and therefore the pressure for landlords to achieve the rents they desire and the quality of tenant that they want to get in means it is important to provide accommodation that suits.” Up to scratch Evans’s biggest September deal proves this point. It came at Langstone Technology Park, near Havant, where fire safety specialist Apollo Fire Detectors took 40,000 sq ft in a building that has recently been delivered with an EPC rating of A+, meaning it effectively has negative carbon emissions. “That estate was built to BREEAM Excellent standard and reached EPC A+, which means that the base build of the building is run entirely from energy that is generated from the solar panels on the roof,” says Evans. A range of measures are being implemented by landlords to bring existing buildings up to scratch, including the removal of gas supplies. “We are moving away from gas supplying these units, which inevitably improves the EPC rating, along with things like increasing the energy efficiency of lighting using LEDs, fitting solar panels on the roof and installing electric vehicle charging points,” Evans says. “The challenge with that, though, is that power needs to be available to compensate.” The complexities of the National Grid notwithstanding, Evans believes the south coast industrial market is in good shape. She cites a deal for a tenant in Portchester re-signing after a decade at almost double the rent. “That really demonstrates why investors find the area attractive,” she adds. “There is a lack of land, so there is always a lack of stock and demand is always outstripping supply. When opportunities come up, investors are always keen to get into the region.” EG’s Dealmaker of the Month is selected based on deals submitted to EG Radius through our On-Demand Rankings. Head to www.eg.co.uk/agents/on-demand-rankings to find out how to submit your deals.