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Cautious optimism in MK’s industrial market

Cautious optimism remains in the industrial market in Milton Keynes and, although growth remains, there are early signs that it may be slowing, according to national commercial property consultancy Lambert Smith Hampton (LSH).

The Industrial & Logistics Market Review for H1 2018 shows that take-up in units in excess of 5,000 sq ft in the first six months of the year totalled just under 400,000 sq ft.

This is approximately 66% of the figure for the same period last year, although considerably lower than H2 2017 when a number of big deals significantly altered the figures.

John McDougal, head of office at LSH in Milton Keynes, said: “The lack of take up in the mid-box range was down to an almost complete lack of supply, rather than the level of demand.  The reduction in the number of deals in the 5,000 to 10,000 sq ft category also suggested a potential weakening of the smaller unit market and it may be that concerns over Brexit are adding uncertainty to the market.

“We have seen an increase in rents but the rate of uplift has slowed down” he said. “A good example of this is at the 1984-built Saxon Park, now refurbished, where rents have risen from £6.15 per sq ft to £6.95 per sq ft in the past 12 months.”

He added: “The speculative development market remains buoyant, with completion of Gazeley’s 574,000 sq ft Altitude and good interest and letting success at Chancerygate Business Centre Phase 2, and LaSalle Investment Management’s Optima 50.

“With 75% of the available sq ft in just five buildings, the supply figures are misleading.  The stock of units between 5,000 and 40,000 sq ft is less than nine months’ take-up and the acute shortage between 40,000 and 100,000 sq ft also remains.  This imbalance between supply and demand remains advantageous for landlords,” added John.

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