The industrial property market in Wales witnessed a notable decline in Q3, with large industrial space registration dropping significantly.
- Knight Frank reports a reduction in take-up from 680,000 to 342,000 sq ft between Q2 and Q3 of this year.
- Five leasehold agreements contributed to the Q3 statistics, predominantly influenced by slower market conditions.
- The ongoing demand for prime spaces drives headline rents up despite a cautious market.
- Future prospects remain optimistic with notable transactions anticipated for Q4.
The industrial property sector in Wales experienced a significant decline in large space acquisitions during the third quarter (Q3) of this year, as highlighted by Knight Frank’s recent research. The data reveals a drop from 680,000 sq ft in Q2 to 342,000 sq ft in Q3. Despite this reduction, the cumulative transactions of approximately 1.35 million sq ft so far this year are comparable to figures from 2023.
The reported Q3 take-up involved five transactions, all leaseholds, with a distribution of three in south Wales and two in the north. The most substantial deal featured a letting of 77,000 sq ft at the South Wales Distribution Centre, Kenfig Industrial Estate, to Roche Logistics.
Various factors contributed to the market slowdown, including electoral events and a typically quieter summer period. Neil Francis of Knight Frank noted that increased due diligence has extended completion times for transactions, reflecting a more cautious approach by both occupiers and lenders.
Despite the decline in take-up, the market has seen an uptick in headline rents for prime industrial spaces. A recent transaction at Indurent Park, Newport, set a new estate headline rent upon leasing a 42,000 sq ft unit.
Knight Frank identifies the existing inventory of large industrial units in Wales at approximately 5.2 million sq ft, maintaining stability since the previous quarter. A significant portion includes the 850,000 sq ft former Wilko distribution centre in Magor.
Current and potential projects, such as the Avara Foods site in Abergavenny, continue to generate interest due to their locational advantages and potential for refurbishment and development. This signal of enduring demand aligns with a steady appetite for well-positioned freehold properties.
On the topic of secondary industrial stock, there is a noted scarcity of high-quality spaces close to the M4 corridor. Well-maintained units are seeing strong demand, whereas interest is dwindling for lower-quality options.
The industrial property market in Wales faces challenges but exhibits resilience with stable demand for prime spaces and potential future developments.
