Wales: Commercial Space Review
An analysis from JLL of the lack of available commercial space could potentially disrupt the economic and job growth in Wales. The city of Cardiff continues to see economic growth for its prime Grade A office space along with the developments in Central Square and Capital Quarter but for the outlying areas of Wales the lack of commercial and office space being created is becoming a problem in Newport and Swansea. The analysis suggests that with a lack of new developments the overall Welsh economy could see a slowdown.
The South Wales Report released 6 March describes the lack of supply:
“...applies as much to industrial space, such as manufacturing facilities, warehousing and distribution centres, as it does to office space.”
With Brexit and a new Land Transaction Tax, which replaces the stamp duty, take up remains robust at 4%. However commercial development is not keeping pace with demand with a decrease of 18% in stock available by the end of 2017 compared with 2016.
Chris Sutton, lead director at JLL’s Cardiff office said:
“Whether it’s warehouses or offices, Grade A space attracts Grade A occupiers – bringing high quality jobs and investment. And it doesn’t have to be a major PLC – increasingly niche, small start-ups in everything from tech and digital to life sciences and engineering are looking for first class space to deliver quality of life and attract the right staff.”
“But currently demand is far outstripping supply. And the lack of available space in Wales is not only impacting our ability to attract prime employers, it could also threaten the retention of existing occupiers looking to upgrade their premises.”
Three of the largest firms to open operations in south Wales in the past year are AluK, CAF of Spain and Sharp Clinical Services.
The new 350,000 square foot South Wales headquarters opened its doors in September 2017 with the launching of new design studio, Academy and R&D facility. AluK is an international designer and engineer of aluminium building systems,The company has seen record growth over the past three years with the capability to deliver 12,000 tonnes of aluminum at its renovated former wind turbine facility in Cheapstow.
The Academy is the new training centre for ‘design, installation and software courses for customers’ in a repot in the trade publication Window News (WN).
Technical Director Nick Cooper, of the Academy, said to WN:
“We believe this is the most advanced facility of its kind in the UK for fabricators and installers of aluminium fenestration products. Whether customers are new to aluminium or are experienced manufacturers wanting to learn about any of our new products, we have a range of very worthwhile courses on offer – and all free of charge of course.”
Also opening a new production facility in 2017 was the transport company CAF of Spain. The company is a global leader for products in the railway industry with rolling stock, components, infrastructure, signalling and other services. The plant is expected to ready for operation by autumn 2018 with 200 staff and a staff level of 300 by 2019.
The 46,000 square meter production plant is located at Celtic Business Park near Newport South Wales. Railway Gazette (RG) reports that the components to be manufactured a range of different vehicle types, including diesel and electric multiple-units, trams and high speed trainsets.
CAF’s UK Director Richard Garner states:
‘The factory will have the flexibility to allow us to respond to the exacting demands of both existing and new customers by providing the most complete offering of any rolling stock provider operating in the UK.’
CAF is expected to have invested £30 million in the plant along with a grant from the Welsh Government Inward Investment Programme.
First Minister of Wales, Carwyn Jones in RG:
‘This £30m investment is a major economic boost that we hope will kick-start the growth of our rail sector and create hundreds of highly skilled, very well paid jobs.’
CAF plants in Spain have supplied trams in Edinburgh, Midland Metro, Heathrow Express and Northern Ireland Railways.
The report states:
‘CAF is now targeting London Underground and the Docklands Light Railway, as well as High Speed 2 and the future Wales & Borders, West Midlands and South Eastern franchises.’
Sharp Clinical Services
In April 2017 Sharp a unit of UDG Healthcare was relocating from its previous Welsh facility in Crickhowell, Powys to to a new facility in Rhymney in South Wales. Sharp Clinical Services provides pharmaceutical packaging and advanced clinical supply chain services.
The plans call for a ‘doubling its workforce and to build a new £9.5 million European Clinical Services Centre of Excellence, a multiple-phase pharmaceutical manufacturing, packaging, and distribution facility in Wales” according to GEN Magazine of the Genetic Engineering & Biotechnology News service.
The news report states:
‘The project’s first phase, set for completion by late 2018, will consist of acquiring and renovating a 110,000-square-foot facility within the site. An initial 75,000 square feet will be fitted out in the new facility, which the company said will triple its clinical service capacity for Pharmaceutical, Biotech, and clinical research clients.’
Sharp has promised to retain its 70 current employees and add 73 more positions thanks to £500,000 in financing from the Welsh government.
In its analysis and outlook for Wales JLL has provided some ways for the government to bring more potential sites and space to the market. JLL recommends simplifying the planning process and ‘...using devolved taxes to incentivise investment and development rather than imposing additional cost on development.’
Other methods include : ‘Facilitating infrastructure provision in order to prepare land for development can also make a significant difference by helping to remove uncertainty for developers and occupiers, as would viability gap funding and the removal of void rates on speculative development, to help push investments over the line.’
Chris Sutton Lead Director for JLL in Cardiff adds:
“If we don’t address this growing lack of commercial space in Wales we will fail to attract inward investors and could even fail to retain the more footloose and agile businesses already in Wales, from manufacturing concerns to financial and professional services companies, who may choose to go elsewhere.’
“We know that public finances are limited and energies and expertise are understandably focused on Brexit preparations, but swift action from the Welsh government in terms of planning and investment could help ensure Wales has the right property offer for business.”