Why South-East Industrials?
- Industrial space in the South East, and particularly in London, has reduced over the last 30 years (a 46% decrease in London to quote a Deloitte survey). The land has gone to higher value uses, such as residential, retail and leisure. We expect this trend to continue. Reduction in supply should lead to higher rents.
- Development of multi-let industrials in the South East remains sporadic. There is a shortage of industrial development land in London and the South East. Where developers build industrial, they tend to opt for larger, single units, which are more cost-efficient to build and where you only need to find one tenant, as opposed to a number of tenants for a multi-let scheme. In addition, pre-let development is rare in the multi-let sector. These factors continue to constrain multi-let development in the South East, and so enhance the lack of supply referred to above.
- The growth in online retailing is one of the factors driving increased demand for industrial space, a trend we expect to continue. In addition, smaller, multi-let industrials are less exposed to the widely publicised problems facing UK retailers, as the occupational market for multi-let industrials is highly diversified and not overly dependent on the retail market.
- Clipstone targets industrial estates capable of improvement by intensive management. That improvement is achieved by refurbishment, by the upgrading of an estate through better parking and signage, by aggressive marketing of vacant units, by seeking to improve the calibre of tenants on an estate, by the lengthening of leases and by increasing rents.
- Refurbishment of industrial property can be achieved at a low cost yet have a material impact on rents and capital value. Clipstone has specialist asset managers who are experts in this field. It is far cheaper to refurbish industrial property than other asset classes. See Clipstone’s refurbishment projects on our Case Studies Page.