Rents
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The falling availability of good-quality buildings is likely to have a significant effect on rents over the next two years and give landlords the upper hand in negotiations. Industrial rents fell by 3% in 2009 and by 0.6% in 2010, according to property agency DTZ, but it is predicting rises of 0.5% this year and more than 1% in 2012.
Perhaps even more significant is the reduc tion in rent-free periods that are offered by landlords as incentives to get tenants to sign up. On average, these rose to 12 months rentfree for every five years of a lease in the recession, but are now down to eight months in some areas of the country.
Many transport firms have taken advantage of the conditions that have existed until now. According to DTZ, last year 3PLs accounted
for 23% of total demand for sheds larger than 50,000ft2 compared with 14% the year before. But DTZ head of industrial and logistics Simon Lloyd says: “Although there is still good space out there, the choice is more limited.”
King Sturge’s David Brooks adds: “If companies are thinking of taking advantage of falling rents, the door is starting to shut.”