Industrial property landlords and developers are being urged to deliver more high-quality stock in Surrey to meet growing business demand, says a regional specialist.
Maria Hoadley, a partner specialising in industrial property based at property consultancy Vail Williams’ office in Woking, says industrial deal activity across the county has been growing throughout 2024. However, the continuing flight to industrial quality means there is a distinct lack of the ESG-activated stock sought by occupiers and a great opportunity exists for anyone able to plug the gap.
She believes the challenge for the Surrey industrial market is the dearth of quality Grade A stock available on the market. Maria said:
“When industrial occupiers think about a place to locate their business, they may not automatically think about Surrey, but perhaps, with a little more investment in stock here by landlords, they could and should."
“Having seen some 210,000 sq ft of industrial space let since January spanning over 30 deals, well above the 10-year average of 120,000 sq ft, we are starting to feel a sense of buoyancy here once more."
“However, thanks to the challenges of the last 18 months where build costs reached eyewatering levels and the general political and economic landscape made industrial development more questionable, we now have an industrial supply gap within certain locations in the Surrey area."
“This is particularly true for quality units in the sub-10,000 sq ft category which boast the ESG credentials necessary to attract occupiers.”
Maria, who has more than 30 years’ experience in commercial property across the Thames Valley and M4/M3 corridor, added: “Our message to Surrey industrial property landlords is that there is absolutely demand here."
“If you have a secondary or tertiary asset and invest in it to deliver a quality product back to market, with EPC ratings of B and above and good or excellent BREEAM ratings, your asset will let – and at strong rental levels."
“For industrial occupiers seeking a value for money location in the south east, Surrey should be on your geographical radar, particularly if you want to be close to the M25 and/or Heathrow Airport, but don’t want to pay the rents that come with locating in Heathrow."
“Meanwhile, for those developers that have been trying to make viability stack up and will need to see land values and development costs level out a little more in order to take that next step here, our message is that if you build it, they will come.”
Maria said industrial locations such as Chertsey, Staines, Egham, West Byfleet, Weybridge and Woking all benefited from extremely good transport links – be it access to Heathrow Airport or the M25. They also had the additional bonus of being located outside of the ULEZ zones which can be so expensive for logistics operators located nearer to Heathrow.
Alongside these benefits was the fact that Surrey industrial stock was also competitively priced, particularly when compared with its nearby Thames Valley or Heathrow counterparts.
“We see a good churn of enquiries for industrial space here, particularly in the sub-10,000 sq ft category as that’s where the market is. However, that’s not to say that warehouse units of 50,000 sq ft and above won’t let, if priced at the right level."
“Whilst prime industrial rents here have risen by 5% in some cases, sitting at around £25.00 psf for Grade A stock closer to the M25, most available stock can be leased for sub-£18 per sq ft. Occupiers increasingly want environmentally friendly buildings on sites which are both accessible and powered-up, however, supply of ESG-activated stock remains limited."
“Weybridge, Byfleet and Staines tend to attract larger, ESG-focused occupiers that are more logistics and manufacturing orientated.”
Maria said the majority of deals this year were transacted in Guildford, Camberley and Farnborough for smaller units in the sub-10,000 sq ft because existing occupiers in the Surrey industrial market were SMEs, start-ups or family-run businesses with smaller requirements – hence the average size of unit let in Surrey being approximately 7,000 sq ft.
She added that developments in Weybridge, Coulsdon and Egham were delivering larger premises, while the supply of smaller units was good at Chertsey Industrial Estate, Causeway Central in Staines and Chertsey Industrial Park.
Photo: Maria Hoadley, a partner specialising in industrial property based at property consultancy Vail Williams’ office in Woking
