Reading was once again announced as one of the best places to live and work recently, ranking second in the UK for growth, narrowly behind Oxford. And as a business based in the region for many years now, we can certainly vouch for that!
But with such a reputation clearly comes property demand, which we expect to continue into 2020 as more and more businesses and their people look to the Thames Valley as a place to locate.
With this in mind, in recent years strategic land across the Thames Valley has been targeted by developers for residential development in order to meet Government housing targets.
However, as the residential market continues to stagnate, we are starting to see more and more industrial opportunities coming to the fore.
But why now?
The Thames Valley is well-known as a go-to place for large manufacturing and logistics business, boasting some of the UK’s leading players in this field, from the million sq ft Tesco Distribution hub to Harrods 400,000 sq ft unit at Thatcham.
Over the last 10-15 years the Thames Valley region has lagged behind in delivery of new industrial stock to market.
Add to this the fact that the death of the high street has increased online sales, creating more demand for last mile delivery/logistics provision across the region, and what you get is increased demand for high-quality industrial and warehouse units.
However, demand continues to outstrip supply, driving rental values up as a result.
In recent years, rents have risen between 20-25% across the Thames Valley and West London. Park Royal is now reaching £17-18 per sq ft, at Heathrow this is about £16.50 per sq ft and Reading is now £12 per sq ft.
Industrial as an attractive opportunity
For the developer, it is often cheaper, quicker and less contentious to deliver industrial sites than it is residential.
This is down to rising CIL and environmental deliverables in policies such as the Green Deal, which are increasing development costs for residential schemes, placing a squeeze on the viability of such developments across not just the Thames Valley, but the UK as a whole.
And with industrial schemes delivering vital employment uses on brownfield land, such opportunities can prove an attractive prospect for local authorities.
What are we seeing in the Thames Valley?
Headline new industrial stock rents are continuing to rise which is pushing industrial land values up as developers seek to build on strategic sites formerly earmarked for residential development.
Indeed, we are already starting to see the results of this at a number of strategic land sites which, initially expected to deliver residential, have resulted in the delivery of new industrial schemes and this is a trend which we expect to see continue into 2020.
The ICI plant site in Slough which was a town centre brownfield site close to the station and town centre, was expected to go for residential but went to Panattoni for industrial development.
Meanwhile, the 23 acre HPE site in Bracknell sold to Chancerygate for a predominantly logistics use as opposed to more residential as was initially expected. And the site at J12 Theale which had been earmarked for housing, recently sold for logistics development because it was perfect strategic location for such a site close to Junction 12 of the M4.
So, what does all this mean?
There is strong demand for strategic development land in the Thames Valley area – at the right price.
And, as we look ahead to 2020, landlords and developers should be prepared for more industrial development which will, of course, impact on land values.
There may well be change ahead regarding housing delivery following the recent Election, and this, together with rising industrial land values, may mean that landowners will want to consider bringing forth their land for industrial development in 2020.
The demand is there and it can deliver a quicker return, whilst helping to deliver employment land use.
To help make the most of a strategic land opportunity, whether you are a landowner or developer, Vail Williams can help.
With experience in the acquisition and disposal of strategic land, land appraisal, residential and commercial planning expertise and development consultancy, we have the knowledge and know-how to help you achieve your objectives, whilst delivering the potential to de-risk industrial development through our network of potential end-users.
For more information about the issues discussed in this article, don’t hesitate to get in touch.