Industrial and Distribution Performance

The industrial sector in the south east has seen a fall of -26.1% in capital growth value since July 2008. Manufacturing has decreased dramatically and is down by -12.2% to May 2009. The CIPS Purchasing Managers’ Index in April suggested that the worst may be over, but the sector is shedding labour at the fastest rate since the survey began in 1991. This has led to reduced demand for industrial space, with no rental growth during the last year and prospects considered fairly restricted.

As the occupational market has remained relatively weak, industrial development across the county has been limited. That said, ProLogis has secured detailed planning permission for a warehouse unit of 25,441m2 (273,855ft²) on the site of the former Littlebrook Power Station. In light of diminishing demand for larger units, ProLogis are considering alternative development proposals for all or part of the 14 acre site. Preparation of the development site at Neats Court, Sheppey is under way with ground works, services and site infrastructure due to complete in autumn 2009.

In Maidstone, AXA Real Estate Investment Managers revised its Kent International Gateway rail freight scheme plans. The planning application for the 275 acre development has been downsized to include 297,280m2 (3.2mft²) of space, as opposed to 371,600m² (4mft²). After Maidstone Borough Council’s rejection of the scheme in early 2009, AXA REIM has applied for the inquiry to be decided by the Secretary of State. Despite limited activity, this year has seen the completion of some smaller unit schemes. Schooner Park, Dartford comprises 24 high quality business units providing 159 - 480m2 (1,712 - 5,172ft²). Units are available leasehold or freehold, with quoting rents/prices of £118.4m2 (£11ft²) and £1,722m2 (£160ft²) respectively. A small scheme at Parkwood, Maidstone comprising six units has attracted three lettings of £96.87m2 (£9ft²), with nearby Equilibrium nearing completion.

Despite falling rental values and waning occupier demand, investors have shown some interest in prime distribution units with good covenant strength. In Sittingbourne, Morrisons has bought a unit at G Park. The 85,468m² (920,000ft²) unit was sold by Standard Life Investments at £80m reflecting a 6.79% net initial yield. The unit is let to Morrisons on a 20 year lease at a rent of £5.4m.

In Paddock Wood, 3663 First for Foodservice opened a distribution hub with 11,148m² (120,000ft²) of warehousing in August 2009 to replace three existing depots. In early 2009, GSE Design & Build completed a £4.2m project to build a 7,432m² (80,000ft²) warehouse and offices for jet engine overhaul company Summit Aviation, in Manston.

Lettings

Location	Landlord	Tenant	Size m2 (ft2)	Rent	Lease Term	Agent
Great Stonar House, Sandwich Industrial Estate, Sandwich	Private	Private	89,486	£200,000	10 years	Pearson Gore
4 Crown Quay Trade Centre, Eurolink, Sittingbourne	London & Cambridge Properties	Storage King	15,602	£105,313	25 years	Watson Day King Sturge
5 Stirling Park, Rochester Airport	IPIF	Medway Maritime Trust	11,700	£70,050	15 years with breaks at years 5 and 10	Watson Day King Sturge
Unit 5 Nimbus 20/20, Maidstone	Variad	Newed Eyre	3,477	£29,550	10 years	Core Commercial
Unit 7 Schooner Park, Crossways Business Park, Dartford	Frogmore Real Estate Partners L.P.	Private	1,712	£17,500	10 years	CB Richard Ellis Altus Edwin Hill

Sales

Location	Vendor	Purchaser	Size m2 (ft2)	Tenant	Price	Income	Yield	Agent
G Park, Sittingbourne	Standard Life Investments	Morrisons	920,000	Morrisons	£80m	£5.4m	6.79	CB Richard Ellis Savills
Haslemere Industrial Estate, Sutton Road, Maidstone	F & C Asset Management PLC	Milton Group LTD	62,895	Multi-tenanted	£3.18m	£362,275	8.48	Strutt and Parker Montagu Evans
Unit 2 Swan Business Park, Sandpit Road, Dartford	Direct Metal Services Ltd	TRS Limited	4,594	-	£396,000	-	-	Cluttons LLP
2 Saxon Shore Way, Eurolink, Sittingbourne	Saxon Shore Developments	Olympic Motor Company	2,518	-	£217,000	-	-	Watson Day Harrisons