In its latest end of year report St Modwen has announced that it will be delivering between 1.5 and 1.7 million sq ft of new space to the market.
This is almost double the amount delivered in 2018. Of the 1.7 million sq ft expected to come forward, some 1.5 million sq ft is already committed.
The company states it has grown its total future pipeline to c. 19m sq ft, 45 per cent of which already has planning with an associated ERV of c. £56 million
Mark Allan, Chief Executive of St. Modwen, said: “Our Industrial & Logistics business had a positive year in 2019, as we continued to reinvest the proceeds from our non-core disposals into our substantial development pipeline in this growth sector. As such, industrial and logistics assets now make up 44 per cent of our portfolio, up from 19 per cent when we launched our new strategy in mid-2017. We expect this to grow further in the coming years, as we accelerate the delivery of our attractive pipeline.
We expect development completions to increase materially in 2020, to 1.5-1.7m sq ft, which allowing for some lease-up time, is expected to drive strong income growth for 2021 in particular. There is some 1.5m sq ft already committed, with a total development cost of £133 million.
“Around 80% of this space comprises units below 150,000 sq ft, with an average unit size of 40,000 sq ft. This leaves us well-positioned to meet the growing demand for last mile delivery space, as evidenced by our recent lettings to DHL and Ocado, and modern warehouses near urban locations and good availability of labour.
“While availability in the overall logistics market has increased over the last two years, this has been driven by the delivery of speculative mega-box units over 400,000 sq ft, as availability at the smaller 100,000-200,000 sq ft end of the market has remained stable. We continue to avoid speculative development of mega-box space, as we continue to see better long-term prospects at the small to medium end of the market.”