The development of Dunsbury Hill Farm, a 48-acre site beside one of Hampshire’s main arterial routes, the A3M, took a step forward with the grant of outline planning consent this year.
Next year should see the start of enabling infrastructure works that will cost £4.3m and, early in 2015, the marketing process will begin to find a developer/investors and occupiers for the project, which will provide about 620,000 sq ft of employment space between Havant and Waterlooville.
Robin Dickens of Lambert Smith Hampton, who is advising the site’s owner, Portsmouth city council, says Dunsbury Hill Farm is billed as “the new business gateway to the Solent”.
The scheme has been on the horizon for 30 years, but Dickens says the trigger for developing the land, owned by Portsmouth council since the 1940s (even though it lies within Havant’s boundaries), was the completion of the Hindhead road tunnel, 27 miles up the
A3 in Surrey.
The 2011 completion of the 1.14-mile tunnel, at a cost of £371m, reduced journey times from the M25 to Dunsbury Hill Farm to about an hour.
Portsmouth council is focused on maximising employment and is flexible about the way the site is developed, says Dickens. However, distribution is limited to 20% of the space under planning authority Havant’s consent, which also includes scope for a 60,000 sq ft hotel and conference centre.
But Dunsbury Hill Farm cannot cater for immediate requirements – and there has been an upturn in demand. JLL industrial and logistics director David McGougan says that in 2013 and 2014, demand for industrial and distribution space returned to pre-recession levels.
“Generally speaking, stock levels are not being replaced and there is a real lack of good-quality buildings over 25,000 sq ft,” says McGougan. “Conditions are right for design and build. E-commerce and the advent of dark stores have seen a couple of larger buildings bought in the last year.”
At one end of the scale, retailer TJ Morris, trading as Home Bargains, has signed up for a 720,000 sq ft distribution centre at Solstice Park, over the Wiltshire border in Amesbury, where the internal fit-out should be complete by July 2015. Online supermarket Ocado has taken an assignment of 240,000 sq ft at Walworth Business Park in Andover, and German discounter Lidl is building a 440,000 sq ft distribution at Nursling on the M271, due for completion in late 2015.
Manchester Airports Group, owner of Bournemouth Airport, is building a 160,000 sq ft unit for AIM Aviation, designer and manufacturer of aircraft cabin interior products, at Aviation Business Park. The £11m facility should be complete by summer 2015.
Meanwhile, at the other end of the scale, courier companies are absorbing more stock. “There has been a big pick-up in demand from parcel operators such as UPS, DPD and FedEx, all taking additional space, which is a trend across the country due to the increase in internet shopping,” says Matt Poplett of Hellier Langstone.
Among the design-and-build opportunities is Evander and Rockspring’s 17-acre site at Test Lane, Southampton, fronting the M271, where design-and-build warehouse space of up to 250,000 sq ft could be developed.
There are also speculative schemes in prospect. Oceanic Estates is building 130,000 sq ft in Fareham, due for completion in November, and Walworth Business Park owners Kier and Test Valley borough council are planning to speculatively develop 50,000 sq ft, which could be on site next year. Meanwhile, Aviva, with development manager Marick, has applied for planning consent for two units at Kites Croft, Fareham, one of 30,000 sq ft and the other 9,000 sq ft.
But if it’s institutional grade space of over 30,000 sq ft that is wanted south of Basingstoke, then F&C Reit’s 68,000 sq ft Unit 1 at Strategic Park is the only one currently available, says Lambert Smith Hampton’s Adrian Whitfield.
“There is a lot of demand from port-related occupiers too,” says Whitfield, who adds that for the first time he can remember, there is no vacant space on the Nursling Industrial Estate.
Whitfield says that following last year’s take-up of more than 2.6m sq ft – a six-year high for the region – this year the market is on track to match or exceed that figure, with almost 2m sq ft let between January and August. The only thing likely to slow it down is the shortage of good-quality stock, he says.
Rents up, incentives down
The shortage of space is driving rents upward and incentives downward, according to JLL’s David McGougan. “Many multilet estates are achieving full occupancy and landlords can take a harder line, adding to property values by increasing rents slightly,” he says.
The range for secondhand space is between £6.25 and £7 per sq ft.
Lambert Smith Hampton’s Adrian Whitfield says headline rents are moving out to £8.50 per sq ft on new space.
