Industrial property in Wales advances in the second quarter of the year

Industrial property in Wales advances in the second quarter of the year

Occupancy of industrial properties over 50,000 sq ft in Wales reached more than 680,000 sq ft in the second quarter of 2024 – double the 340,000 sq ft recorded in the first three months, according to the latest research from Knight Frank.

According to the global real estate consultancy, this brings total occupancy in the first half of 2024 to just over 1 million square feet, which is more than 400,000 square feet more than the same period in 2023.

Neil Francis, head of Knight Frank’s Logistics and Industrial division in Cardiff, said: “Q2 2024 was different to recent years due to the sale of the 1.6 million sq ft Ford site in Bridgend. As the buyer is planning to use the site for a data centre, the facility is no longer classified in the industrial/warehouse use category and can therefore be removed from the Welsh industrial figures.”

The Knight Frank report revealed that while the first quarter was dominated by freehold sales, two-thirds of transactions in the second quarter were lettings, the largest of which was the letting of Unit 8 St Modwen Park to Aerfin.

Neil Francis said: “This 110,000 sq ft unit was built speculatively last year and the new 10-year lease was secured by a master rent for a unit of this size in the area.

“The largest sale of the quarter was 230,000 sq ft at Reevesland Industrial Estate, Newport to Kwan Yick, who acquired the property including the vacant space they will now occupy.”

Availability now stands at 5.2 million sq ft, of which 16 per cent is represented by the 850,000 sq ft Wilko portfolio in Magor, which is rumoured to be up for offer again.

“Looking ahead to Q3, the market for units larger than 50,000 sq ft still looks positive,” said Neil Francis. “At St Modwen Park in Newport, the last two units to be built are under offer, with the 43,000 sq ft Unit 7 due for completion in July and Unit 10 due for completion in October. Both will continue the trend of setting new top rents.”

Additionally, the new 52,582 sq ft RYB 1 unit at Rhyd y Blew in Ebbw Vale, which completed construction in October, is now being offered to a local occupier who is expanding its operations in the region.

While in the 50,000 sq ft size category, the 36,705 Axis 32 unit in Coryton, Cardiff is under offer for a Build to Suit lease, with the lease completion expected in July, and with construction works commencing immediately for an occupation in Q1 2025. This lease will create a new core lease for South Wales once completed.

Neil Francis concluded: “The recovery in lettings this quarter is encouraging, but unfortunately much of the larger industrial stock that has come to market recently is in poorer condition in secondary locations. There are only two Grade A buildings in South Wales and one in North Wales currently available and all are under offer – which again highlights the continued flight to quality by occupiers.”