New property initiatives to support provision of SME space in Warwickshire
As a buoyant industrial property market struggles with a shortage of affordable SME space, Warwickshire County Council is actively engaged in efforts to improve supply.
The Coventry and Warwickshire area’s commercial property market is seeing unprecedented levels of lettings, driven by demand from third party logistics and e-commerce firms, as well as new local plan employment land allocations coming on stream. This demand is focused on the industrial market - the development and letting of large ‘big-box’ units developed for warehousing and manufacturing.
Lettings reached 1.3million sqft in Q2 of 2023 alone with total lettings for 2022 exceeding 5million sqft for only the second time in 15 years, according to property data company CoStar. The Coventry market includes the five district and boroughs of Warwickshire as well as the city.
This is all excellent news for investment and employment. Most of these investments are from overseas businesses, where at least 10% of the firm is owned by an overseas entity. Warwickshire is a leading centre of FDI (foreign direct investment) with companies investing here in the last 18 months including Rhenus Logistics (Germany), DHL (Germany), Geodis (France), Moonpig (UK), Syncreon (US) and DP World (Emirati).
A study released late in 2022 by EY and CCN (the County Councils Network) found that, with 20 projects, Warwickshire was the leading shire county for FDI in 2021 of the 36 English counties. Meanwhile for the study period of 2018-21, Warwickshire was the leading county for FDI of the nine Midlands counties, and third nationally. During this period the study recorded 46 FDI projects in Warwickshire, behind only Cambridgeshire (58) and Hampshire (56).
Data from Invest in Warwickshire, the inward investment service at Warwickshire County Council, has also shown that per capita, the Coventry & Warwickshire area was the leading location in the Midlands for FDI inward investment.
All this investment is welcome, creating new jobs and development in the county, but much of the new industrial development has been on larger units, typically from 100,000 sqft up to 1m sqft, with much less supply for units sub-100,000 sqft, that would be taken up by small and medium sized SME businesses. Smaller units are more expensive to develop, an issue exacerbated by increased construction costs in recent times.
A report published on 16th June by Coventry & Warwickshire Chamber of Commerce says that companies in the area are struggling to find adequate and affordable space, which is holding them back from expansion. They say that this is causing a lag in the local economy and also preventing new jobs being created.
The report makes seven proposals aimed at improving the provision of space. These include the encouragement of the development of smaller units to be built alongside larger warehouse developments, and for local authorities to establish a public sector fund or funds, and become more pro-active in bringing forward employment opportunities. Warwickshire County Council has already been considering some of these measures, and developing initiatives of its own.
The County Council’s arms-length property company, Warwickshire Property Development Group (WPDG), formed in 2021, is already working on a scheme of light industrial units in the town of Southam. The Sucham Park scheme is set to deliver nine light industrial units, ranging in size from 1,900sqft to 15,000sqft. The 42,000 sq ft development will be completed in November 2023 and will produce space to suit a range of businesses. The site at Holywell Business Park forms part of the established Kineton Road Industrial Estate and will bring into use land that has remained unused for many years.
Meanwhile, the £100m Warwickshire Recovery & Investment Fund was introduced to provide access to debt finance and safeguard businesses in, or those expanding to, Warwickshire from adverse economic effects caused by the pandemic. The £40m Property Infrastructure Fund, or PIF, launched in March 2023, is focused on supporting and enabling new development that will help provide sites and premises needed to drive the future growth of the local economy, including the provision of space for SME businesses.
To read the Coventry & Warwickshire Chamber of Commerce Employment Land Report, click here.
To find out more about the Property Infrastructure Fund (PIF), click here.
To read more about Warwickshire Property Development Group, read here.
For a link to the CoStar piece on the Coventry industrial market, click here.