A multi-let industrial peer recently told me that the best days of his year are those he spends on site talking to his customers.
I couldn’t agree more. The sheer variety of businesses that occupy the average industrial estate is endlessly fascinating, and the drive, entrepreneurialism and passion on display from those running them is inspiring to see.
Among our customers, we have plenty of the companies you would expect, such as 3PLs, MOT garages and manufacturers, but our buildings are also home to hundreds of other types of businesses you may not imagine, such as photography studios, craft breweries, medical facilities and climbing walls.
While keeping things interesting on a day-to-day basis, the diversity of the tenant base is also an attractive risk-mitigating factor for our investors, as is the versatility of the buildings, which are a blank canvas for a huge array of different occupier types.
Multi-let industrial has always been a good place to see real-world trends play out, with wave after wave of growing industries flooding in to replace those that are in decline.
Over the last 15 years, we have seen huge numbers of chain trade counters coming in and taking up space from shrinking sectors like printing, furniture making and manufacturing. We are all familiar with the ecommerce story and last-mile logistics, but the impact is not just on parcel delivery – many businesses occupying our units used to be on the high street. Now their customers shop online, they can take advantage of multi-let industrial’s ability to provide storage, distribution, an office and a shop front all under one roof at much lower rents and with parking right outside.
Many new entrants in the industrial market have taken up space released by the decline in UK manufacturing over the last 50 years. However, research by Gerald Eve has indicated that the trend of declining manufacturing tenants has plateaued. If this trend reverses, perhaps as a result of a renaissance in UK manufacturing driven by new technologies and the drive for locally sourced goods and services, it is easy to see a further uptick in demand for industrial space in the UK.
Of course, nobody really knows who the future occupiers of industrial space will be. However, with the ONS recording that the number of small businesses in the UK has grown by 69% since the turn of the century, we are confident there will be plenty of demand for industrial space from a diverse range of occupiers for some time to come.
Julian Carey is executive property director at Stenprop
Industrial & logistics supplement November 2019
- Currently reading
Tenant diversity is a boon for investors