Office + Industrial 2020 review
Take up was 105,303 sq.ft across 17 transactions, a 53% increase on 2019 but still down on the 5 year average of circa 225,000 sq.ft.
Grade A rents in Watford are currently at £36.50 psf, a 12.3% increase on 2019 with an average size of 6,194 sq.ft. The largest transaction was 28,083 sq.ft to PWC at 40 Clarendon Road.
Grade A office availability is scarce. 40 Clarendon Road has illustrated that there is demand for a good quality office product. All but one floor is let with the majority completing during lockdown. There will likely be an increase in office space coming to the market during 2021 however a large proportion will be tenant space which may offer something different to the market in terms of lease flexibility but is unlikely to appeal to the prime market. Rents have continued to grow as predicted however we are seeing a drift in incentives being offered to counter the current uncertainty around occupation.
The total takeup was low, at 51,089 sq.ft in 7 transactions. This is less than 50% of the 10 year average take up. Grade A rents in Hemel remain static at £27.50 psf. Incentives have increased reflecting the lack of confidence fueled by a third lockdown.
The largest transaction was GAMA Healthcare 19,606 sq.ft, at The Maylands Building who relocated from Watford, and the second largest was Mothercare who also relocated from Watford in search of value.
There is currently over 300,000 sq.ft of available office stock on the market and we anticipate this figure will increase during 2021.
Welwyn Garden City
2020 was a poor year for the Welwyn Garden City office market, with total take up of only 2,075 sq.ft in 2 transactions, and no Grade A activity. The highest rent achieved was £24.00psf at Rosanne House, a refurbished Grade B office building in the town centre.
A lack of acquisition activity from the towns’ largest office occupiers, Tesco and Ocado undoubtedly had an adverse effect on the market as well as a lack of churn resulting from office occupiers being forcibly displaced by permitted development of office buildings. This has turned off what has been a steady stream of office relocations.
Rents in the order of £25.00psf are still being guided on Grade A stock, with the market being polarised between traditional in town, and out of town on Shire Park and Hatfield Business Park, where significant voids remain.
Total take up was 23,961 sq.ft in11 transactions, with the average deal size being 2,180 sq.ft. There was no true Grade A activity, the highest rent achieved being £32.50 psf at Trident House in Victoria Street, a good quality Grade B building. The almost complete absence of any true Grade A space does not tell the true story of where rents should lie for the best space.
The largest deal was the letting of 5,700 sq.ft to Skechers at Centrium, adding to their existing holding, a welcome vote of confidence in the local market.
Taking all factors into consideration, take up figures for 2020 were respectable, with a lack of stock of any significant size or quality simply meaning that larger transactions could not happen.
The total take up was 140,472 sq.ft in 16 transactions with the average transaction size of 8,780 sq.ft reflecting the lack of available larger units. The largest transaction was 22,408 sq.ft; the assignment of Unit E Maylands Point to IIAA. The company were in a competitive situation for the building and a premium was secured for the lease.
Spring Park, Maylands Avenue has seen a number of lettings this year, with a guide rent of £12.50 per sq.ft per annum exc. Only Unit 1, 7,100 sq.ft remains available. And, now only one new unit remains available at Unit 5 Eastman Way, Prologis Park (13,066 sq.ft). There is a general lack of freehold transactions across the market.
DC1 (150,000 sq.ft) Prologis Park, a turnkey datacentre project will complete in February 2021. Prologis Park’s DC234 (233,860 sq.ft) is not on site with completion due Q3 2021, this high quality logistics unit is a much needed product in the North M25 / Southern M1 corridor.
Welwyn Garden City
The total take up for the year was 121,650 sq.ft in 11 transactions, with the largest deal being the letting of Belgrave House on Hatfield Business Park to Alstom, a unit of 45,840 sq.ft.
The highest rent achieved was £11.95psf, paid by Borough Box Ltd, at Quadrant Park. This matches the highest rent achieved psf in 2019.
Welwyn continues to see instances of lettings of larger units in part due to greater stock levels of this type of product in the town, and has also seen it’s first instance of speculative development for some years with construction beginning at A1 Connect in Cole Green Lane. This scheme comprises 3 units totaling 120,000 sq.ft, with the largest, a detached unit of 72,500 sq.ft having already been pre-let to PW Gates Ltd.
This transaction did not however fall into 2020, so is not included in the years’ figures.
The total take up for the year was 75,046 sq.ft in 9 transactions, with supply remaining wholly dependent on churn of existing stock. No new development has occurred, not due to lack of demand, but simply as a result of scarce development opportunities.
The average deal size was 6,800 sq.ft, with the largest transaction being the letting of Unit D at Ventura Park to Express Logistics (c16,000 sq.ft). The highest rent achieved was £16.50psf at the letting of 5 The Dencora Centre, a building of c2,880 sq.ft.
The North Orbital Commercial Park saw two lettings, both achieving close to £11.00psf, a new record for this estate. As a result, quoting rents on the remaining units have now been nudged up to £11.75psf.
The total take up was 145,329 sq.ft in 28 transactions, with the average transaction size of 5,190 sq.ft reflecting the lack of available larger units in the locality. Take up and transaction levels were lower than previous years, however this is more reflective of low supply levels as demand and growth in the industrial market ontinues to increase.
The largest transaction was 28,550 sq.ft on Greatham Road, Industrial Estate, however interestingly this was not to an industrial user but an occupier from the leisure industry.
Top rents in the region are circa £15 per sq.ft, typically for smaller modern units of sub 5,000 sq.ft.