South Wales

The main centres of logistics activity in South Wales follow the conurbations along the M4 and include Cardiff, Newport and locations near the two Severn Bridge crossings. Cardiff and Newport have traditionally been centres for industrial activity by road with easy access to the M4, and freight, typically bulk goods, has been handled in the main ports at Cardiff, Newport, Swansea and Port Talbot. There are a handful of secondhand warehouses on the market which will be suitable for manufacturing occupiers, but big shed prime rents are unlikely to grow in line with other UK regions given the lack of prime stock. The removal of tolls on the Severn Bridge is resulting in more logistics occupiers looking for access to Bristol and is lessening of the differential in rents either side of the River Severn.

Howard Tenens, Cynden and United Plastics Group let secondhand space in the region in 2020. On balance, however, it was a below-average year for occupier demand in 2020 given the lack of appropriate stock and minimal development. There are former large manufacturing facilities which could accommodate new schemes, especially around Cardiff and Newport, but these schemes are likely to be offered on a build-to-suit basis rather than developed speculatively. Closures in the automotive sector, an industry that the region has historically been heavily reliant on, do have the potential to provide some secondhand supply to the market, which in turn is likely to attract the interest of local warehouse developers. In terms of new developments, St Modwen is on site speculatively at St Modwen Park Newport which will deliver some of the first new logistics space the region for several years. Given the constraints of the region and historically weak levels of speculative development, we expect prime rental growth to be below average over the next 3 years at 0.6% per year.