East Sussex continues to set the lead for new speculative commercial development, particularly on the industrial and Logistics fronts.
Commercial Agent Stiles Harold Williams explores why businesses are opting for an East Sussex base.
In the last couple of years new speculative industrial developments have been completed and let at Eastside Business Park in Newhaven and at Connect 27 in Polegate, following on from the earlier successes of both industrial and office development at Chaucer Business Park in Polegate.
In addition, the majority of Ashdown Business Park at Maresfield has now been let on a mostly design and build basis, whilst Swallow Business Park at Golden Cross, near Hailsham is now into its 5th phase of development, having started life as a greenfield site, adjoining the A22.
The reason that these developments have been able to take place is because of the rise in Industrial and logistics rents which averaged £6.30 psf in 2001 have moved up to double figures by 2021, partially on the back of the significantly increased activity in the industrial and Logistics sectors, driven by the rapid move to internet sales, brought on by Covid 19 and the various lockdowns. In addition to grant funding in certain cases.
When compared to the likes of Crawley where rents of £15- £16 psf are being sought for new speculative development in excess of 30,000 sq ft and Brighton where £13- £14psf is being quoted for similar sized buildings, the East Sussex towns offer a reasonable discount to occupiers in terms of rents per square foot at £10- £12.50psf whilst achieving sufficient levels of rent to encourage developers to undertake further speculative development.
We hope that despite the increase in build costs which has resulted in a 25-30% increase over the last 12 months that the appetite for speculative development will continue but we expect that rental levels will need to continue to rise to sustain this.
The Office Market
The office market has not moved at the same pace as industrial and logistics but small out of town office buildings at the likes of Chaucer Business Park in Polegate and high quality buildings like Pacific House, Eastbourne have proved attractive in the past and are now starting to attract strong interest again and compared to the main office centres in Sussex in Brighton and Crawley, offer very competitive levels of rent to prospective tenants of between £16.00- £17.00psf in Polegate and Eastbourne against levels of £35 psf in Brighton and £26 psf in Crawley. This is as companies choose quality to provide staff with the best they can afford.
With a number of office buildings in the main town centres going to Permitted Development, there could be scope for new office development in the future with demand on the increase and opportunities in these towns being limited, albeit we believe that rents are likely to need to be over £20 psf for this to occur.
In addition, with rents set to rise in the main office centres, companies are now likely to start looking for more competitive office rental options in the East Sussex area.
For a more detailed breakdown of the industrial and office sectors and how rents have risen in both sectors across East Sussex over the last 5- 20 years, information can be obtained from the Room to grow Report 2, produced in June 2021 which can also be found here.