Featured Sector: Industrial

During 2012 Glenigan tracked solid gains in the value of industrial projects starting on site, underlying starts were up by over 30% driven by increased demand for logistics and distribution projects. There was some strength from the more traditional manufacturing sub-sector but the weak demand for UK goods, especially from the Eurozone the country’s largest export partner contrained growth. 

Official statistics show that output of new industrial construction was only 3% higher during 2012 after a sharp decline during 2011. New orders on the other hand were more promising during 2012, increasing 24% from 2011’s level; large gains were recorded in the value of orders for new factories and more limited gains were recorded for new warehouse construction. 

The increased demand for logistic space that was recorded over the past three years came from distributors and online retailers. This together with the gradual strengthening in manufacturing output, has trimmed the supply of vacant industrial floorspace and lifted rental and capital values on industrial premises. 

The first six months of 2013 however recorded a sharp turnaround in underlying starts in the industrial sector, down 37% during the first quarter of the year and falling a further 51% in the second quarter of the year. The declines seen in the year so far come as the sector now appears to be in a period of consolidation as the drivers of demand seen last year withdraw.