The uptake of industrial properties over 50,000 sq ft in Wales witnessed a notable decline, according to Knight Frank’s Q3 report.
- Large industrial spaces in Wales’ activity level fell to 342,000 sq ft in Q3, showing a steep drop from Q2’s 680,000 sq ft.
- Despite the quarterly dip, 2024’s cumulative transactions of 1.35 million sq ft align with last year’s figures, indicating steady annual performance.
- The largest Q3 transaction was 77,000 sq ft leased to Roche Logistics at the South Wales Distribution Centre.
- Economic and operational factors, including election periods and intense due diligence, contributed to slower market activities.
Research by Knight Frank highlights a prominent fall in the uptake of large industrial spaces in Wales during the third quarter of the current year. The volume of transactions for properties over 50,000 square feet diminished considerably to 342,000 square feet, a marked decrease from the 680,000 square feet recorded in the previous quarter.
While the quarter-on-quarter figures indicate a decline, the overall annual transaction level, at approximately 1.35 million square feet so far in 2024, mirrors that of the preceding year in 2023, illustrating a consistency in annual uptake despite the observed quarter dip.
Among the notable transactions in the quarter was the leasing of a significant 77,000 square feet at the Kenfig Industrial Estate’s South Wales Distribution Centre to Roche Logistics. This key transaction marked the complete lease of the estate by Mileway, underscoring strategic tenant moves in the region.
Neil Francis, leading the logistics and industrial team at Knight Frank Cardiff, remarked on the market’s downturn. He attributed the slow pace to factors such as the recent election and quieter summer months, which historically affect industrial activity. In addition, heightened caution among occupiers and lenders has led to prolonged transaction processes.
Despite these challenges, a positive trend is noted with an increase in headline rents for premier spaces. The leasing of the final 42,000 square feet unit at phase 3 of Indurent Park, Newport, for a newly established estate headline rent, signals robust demand for high-grade industrial properties.
Knight Frank reports that the cumulative space of large industrial units in Wales remains constant at approximately 5.2 million square feet. Within this, a notable share of 16% is the 850,000 square feet former Wilko distribution centre located in Magor.
Looking ahead, interest has been piqued by the launch of the 125,000 square feet Avara Foods site in Abergavenny, which boasts significant expansion prospects. This site has drawn significant interest from both occupiers and investors, indicating strong demand for versatile, well-located properties with development potential.
However, the secondary market in industrial real estate continues to face challenges. There exists a noticeable shortage of quality spaces near the M4 corridor. Well-refurbished units report high demand, contrasting with declining interest in lower-grade properties.
The industrial real estate scene in Wales reflects both opportunities and challenges, with cautious optimism for prime space uptake despite several market headwinds.
