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Investment market transactions

Investment into the industrial sector continued to slow in the first three quarters of 2023, with just under £0.5bn of transactions completing as investors remained cautious about the prospects for rental growth in the short term. Full year activity is expected to approach £0.8bn, down on the previous 12 months, when activity totalled £1.3bn. Despite the slip in yields, well located properties were still attracting interest, with the three units at Bilton Way, Enfield selling for £50.5m reflecting a net initial yield of 3.86%. The scheme is highly reversionary and the purchaser, Tritax Big Box, is expected to undertake an active asset management program to push rents on from an average passing rent of £15.32 psf.              

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Prime Investment Yields

Prime industrial yields across the Eastern M25 markets moved out in the six months to Q3 2023, standing at 5.19% on average at the end of September 2023. Investor activity has continued to slow following the upward shift in interest rates and now stand at a 76 basis point premium to 10 year gilts, which stood at 4.43% at the end of September 2023. Industrial yields in the Glenny Region have now risen by 194 basis points over the past 12 months following the disruption in financial markets and the economy. With inflationary pressures looking to have eased, the upward pressure on interest rates should subside allowing for greater certainty for investors.  

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Essex

Key Deal

Winsford Way, Chelmsford – Deutsche Finance International have purchased four units at Winsford Way in Chelmsford for £22.64m. The properties were purchased as part of a portfolio from Tesco Pension Fund and are to be held in an urban logistics fund which has been formed with Argo Real Estate.            

Prime industrial yields Essex

East London

Key Deal

Europa Trade Park, Canning Town E16 – The City of London Corporation purchased Europa Trade Park, E16 for £25.5m from Bideford Ventures. The two unit park totals 58,000 sq ft and is let off average rents of under £20 per sq ft. The purchase price reflected a net initial yield of 4.12%.     

Prime industrial yields East London

North London & Herts

Key Deal

Bilton Way, Enfield – the three unit scheme at Bilton Way Enfield was purchased by Tritax Big Box from IM Properties for £50.5m. The scheme totals 135,700 sq ft and is let off average rents of £15.32 per sq ft, offering scope for uplifts at review or re letting. The purchase price reflected a net initial yield of 3.86%.                              

Prime industrial yields N London & Herts

SE London & Kent

Key Deal

Euroway Trade Park, Aylesford – Orchard Street Investment Management purchased the 88,900 sq ft Euroway Trade Park in Aylesford for £14.5m. The seven unit scheme has a number of units let on leases due to expire over the next 12 months, providing the opportunity to grow rental income. The purchase price reflected a net initial yield of 4.96%.

Prime industrial yields SE London & Kent
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Key Contact

Philip Colman

Philip Colman

Divisional Director - Investment Agency
020 3141 3520
[email protected]