Western Corridor. industrial market report

Western Corridor industrial market report Autumn 2017

Western Corridor industrial market report Autumn 2017 3 Introduction Highlights: H1 2017 Welcome to the new edition of our Western Corridor report, the definitive source of market data and commentary on the industrial market in West London and the Thames Valley. The report focuses on market activity and conditions in the first half of this year and compares these with the first and second halves of 2016. In addition, we offer some forward-looking views based on insights from our expert agents and formal model-based forecasts. As you read through the subsequent pages, a number of themes will become apparent. From an occupational demand perspective, the Western Corridor has seen a good level of activity (take-up) involving smaller units but a relative dearth of activity involving larger buildings. Overall available supply, whilst higher compared with last year, remains modest and the supply of Grade A quality space has fallen. Speculative development remains limited indeed the overall level of floorspace under construction on our latest numbers is only around half that recorded a year ago. Prime headline rents continue to rise in the past four years rents across the Corridor jumped by c. 5% per annum, according to our numbers. Investor demand remains strong and, with limited available investment stock, yields have been under downward pressure. Therefore, despite a relatively sluggish UK economic outlook, we are positive that the Western Corridor s market fundamentals remain robust. Each of our highlighted agents is upbeat about their 'patch'. Independent economic forecasts predict that London and the South East will grow faster than the UK and our model-based property forecasts predict more industrial rental growth to come in these markets. Risks and uncertainties are part of life but conditions in the Western Corridor industrial market remain favourable for developers and landlords but a bit more challenging for corporates looking for space. Take-Up 2.1 million sq ft was taken up in the Western Corridor in H1 2017, 3% up on the half-year average over the past 15 years. 1.3 million sq ft in West London. 845,000 sq ft in the Thames Valley. Western Corridor take-up 18% H2 2016 28% H1 2016 Grade A quality space accounted for 11% of all take-up in the Western Corridor. The average size of unit taken up in the Western Corridor was 9,730 sq ft. Supply Available supply across the Western Corridor increased 8% in the 12 months to mid-2017 to stand at 7.8 million sq ft. But Grade A build space fell 18% over the same period to 2.2 million sq ft. At August 2017 there were 11 schemes speculatively under construction totalling 632,000 sq ft. Rents Headline rents in the Western Corridor strengthened in key markets in the year to September 2017. Headline rents moved up in Park Royal Reading Bracknell High Wycombe. Investment Prime yields are currently between: 4.00% and 4.25% in West London 4.50% and 4.75% in the Thames Valley. We believe the competition for the limited stock available in the Western Corridor will continue to put pressure on pricing and could see yields further sharpen over the next 12 months. Industrial occupational demand in the Western Corridor has remained robust, particularly for smaller units sub 10,000 sq ft, despite a reduction in total take-up in the first half of this year. A lack of supply in mid-box units hampered take-up but we are much more positive for the second half of the year, which has already seen Argos sign for a new 73,000 sq ft unit at Island Road, Reading and Williams and Hill sign for a 26,000 sq ft unit at Central Spaceway, Feltham. In addition, a number of new mid-box units are currently speculatively under construction which will bring some much needed supply to the market. A lack of supply continues to contribute to prime headline rental growth across the Corridor and we expect rental growth to be sustained over the next few years. Tessa English Associate - UK Industrial Research +44 (0)20 7087 5521 tessa.english@eu.jll.com

4 Western Corridor industrial market report Autumn 2017 Western Corridor industrial market report Autumn 2017 5 Economic Outlook Take-up Recent UK economic growth has been sluggish, with forecasts pointing to a soft growth outlook this year and next, but regional forecasts paint a better picture for London and the South East. For the UK, the underwhelming economic growth reflects a number of factors: high inflation is squeezing real incomes and subduing consumer spending; businesses remain cautious about investing, in part due to Brexit uncertainties; and fiscal austerity continues. But, even though UK growth has been disappointing, forecasts point to continuing positive growth in the short and medium-term. For example, the latest average of medium-term independent forecasts published by the HM Treasury shows annual average growth of 1.7% over the five years 2017-2021, pretty close to the actual out-turn for last year (1.8%). Growth predictions for London and the South East are stronger. According to Oxford Economics, London and the South East will see respective annual average growth in Gross Value Added (GVA) of 2.2% and 2.1% respectively over the five years 2017-2021 compared with a corresponding UK aggregate of 1.9%. These growth rates for London and the South East are ahead of all other regions, except the Eastern region, for which growth of 2.1% is also predicted. We expect these stronger growth predictions for London and the South East to support occupier demand for industrial and logistics facilities across the Western Corridor. Take-up softens, but still above long term trend In the first half of 2017, around 2.1 million sq ft of industrial and logistics floorspace was taken up in the Western Corridor. Demand was 18% down on H2 2016 and 28% down on the same period a year ago but remained 3% above the long-term (past 15 years) average. The weaker take-up was due to a dearth of transactions involving larger units with activity stronger for smaller units. Overall, in H1 2017, the average size of unit taken up across the Western Corridor totalled around 9,700 sq ft compared with 11,300 sq ft in H2 2016 and 12,900 sq ft in H1 2016. No units over 100,000 sq ft were taken up across the Western Corridor in H1 2017 and only a handful of units over 50,000 sq ft transacted in this period. In our assessment, the limited take-up in larger units, particularly mid-sized units, mainly reflected a lack of availability in these size bands, including low levels of speculative development in units between 20,000 sq ft and 70,000 sq ft over recent years. By contrast, where development in this size range has taken place, there has been good levels of occupier interest. For example, in August 2017: It was announced that Argos had signed for a 73,000 sq ft unit at the newly developed scheme by Peel Logistics at Island Road Reading, a three-unit scheme that only reached practical completion in May. SEGRO announced two lettings at its new scheme Central Spacewaye development in Feltham with both lettings occurring before practical completion with the Satair Group signing for a 19,000 sq ft unit and Williams and Hill taking a 26,000 sq ft unit. These Q3 transactions, along with several other units that we understand are currently under offer and likely to complete before the end of the year, should result in a pick-up in take-up in the second half of this year. Take-up should improve particularly in Grade A space, which had recorded a 48% reduction in take-up in H1 this year compared with H2 2016. Take-up in the Western Corridor million sq ft 4 3.5 3 2.5 2 1.5 1 0.5 0 H2 2010 Source: JLL H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 In terms of the Corridor s two main sub-markets, West London accounted for 61% of total take-up in H1 2017, with 1.3 million sq ft of industrial and distribution floorspace transacted. Take-up in West London was 10% lower than H2 2016 and 23% down on the same period a year ago. The Thames Valley accounted for 39% of take-up in H1 2017, with 845,000 sq ft transacted. Demand in this area was 27% lower than H2 2016 and a third down on the same period a year ago. There was a notable lack of larger units taken up in the Thames Valley in the first half of this year, with the average size of unit taken up in H1 2017 being 8,800 sq ft, more than 2,000 sq ft lower than H2 2016. Therefore, in our view, overall aggregate take-up across the Western Corridor was hampered by a lack of good quality supply in mid-sized units and this shortage dragged down our aggregate take-up number and masked better activity at the smaller end of the market. H2 2013 Grade A space H1 2014 H1 2014 H1 2015 H2 2015 Other space H1 2016 H2 2016 H1 2017

6 Western Corridor industrial market report Autumn 2017 Western Corridor industrial market report Autumn 2017 7 Supply Western Corridor Availability remains low despite a small uptick in supply over the year Prime headline rents ( per sq ft) At mid-2017, the total amount of available industrial and distribution space in the Western Corridor stood at 7.8 million sq ft, including space under construction. This was 6% up on 12 months ago, but still at a relatively low level compared with five or six years ago. Supply in the Western Corridor 15 Around 4.8 million sq ft of industrial and distribution space was available in West London at mid-2017, 62% of total supply across the Corridor. Availability in West London rose by 14% over the 12 months to the end of June 2017. At mid-2017, around 36% of supply in West London comprised Grade A space. At this time there was 1.3 million sq ft of Grade A space available, compared with around 1.7 million sq ft a year ago. M1 million sq ft 12 9 6 3 Available supply in the Thames Valley stood at approximately 2.9 million sq ft at mid-2017, 38% of the Corridor s total. Supply across the Thames Valley fell by 5% over the 12 months to mid-2017. At present, many locations across the region are suffering from a shortage of supply and vacancy rates across some estates and parks are at an all-time low. High Wycombe 10.75 Maidenhead 11.50 Slough 14.50 Uxbridge 12.00 Park Royal 17.50 Greenford 14.50 London 0 H1 2009 Source: JLL H1 2010 H1 2011 H1 2012 At mid-2017 approximately 28% of supply comprised Grade A space, totalling 2.2 million sq ft. Grade A supply was 17% lower at mid-2017 compared with a year ago, whereas the supply of poorer quality space (in Grade B and C buildings) was 19% higher. H1 2013 Grade A space H1 2014 H1 2015 Other space H1 2016 H1 2017 At mid-2017, approximately 31% of supply in the Thames Valley comprised Grade A space (902,000 sq ft), some 7% lower than a year ago. Since the 2008 recession Grade A supply in the Thames Valley has been on a downwards trajectory as demand for modern, well specified units has continued but very low levels of speculative development have taken place. However, over the past 12-18 months there has been a pick-up in speculative development across the region, which should bring some much needed Grade A supply to the market. Reading 13.00 M4 Bracknell 12.50 Camberley 10.00 M3 Staines 14.50 Heathrow 15.00 Hounslow 13.50 Basingstoke 9.50 Rents Limited supply is continuing to drive rental growth The supply and demand imbalance continues to put upward pressure on rents, particularly at the prime end where the scarcity is most pronounced. Over the past four years (mid-2013 to mid-2017), prime headline rents across the 13 locations we monitor rose by an unweighted average of 24%, an average of 5% plus on an annualised (compound) average basis. Over the 12 months to mid-2017 prime headline rents increased in Park Royal in our West London market area and remained stable in other locations. Prime headline rents increased in Reading, Bracknell and High Wycombe over the 12 months to mid-2017 in the Thames Valley and remained stable in other locations. Given that supply remains at low levels compared with historic standards, we are predicting more rental growth to come. Our latest model-based forecasts of the MSCI (IPD) Index indicate rental growth of 4.8% pa over the next five years (2017-2021) for standard industrial units in London and 3.0% pa for standard industrial units in the inner South East over the same period. Based on prime units of c.10,000 sq ft

8 Western Corridor industrial market report Autumn 2017 Western Corridor industrial market report Autumn 2017 9 Speculative Development With supply at low levels and Grade A supply lower than 12 months ago, we believe the case for new speculative development in the Western Corridor remains compelling. Speculative development at mid-2017 At mid-2017 there was just approximately 632,000 sq ft of new floorspace speculatively under construction in 11 schemes in the Corridor; about half the level of development we recorded a year ago. Speculative schemes under construction in West London at mid-2017 Scheme Size (sq ft) Developer Unlike 12 months ago, most of the floorspace under construction was in the Thames Valley, where around 566,000 sq ft was under construction in nine schemes. Speculative development in the Thames Valley accounted for almost 90% of all floorspace speculatively under construction in the Western Corridor. Canmoor and Royal London are developing a new five-unit scheme totalling 155,950 sq ft in Farnborough which will bring some much needed mid-box sized units to the market. In addition, SEGRO is developing a couple of mid-box units on the Slough Trading Estate. At mid-2017 there was around 66,000 sq ft of new floorspace speculatively under construction in West London in two schemes. There is only one scheme speculatively under construction in Park Royal, with Daverlin developing a single unit totalling 29,826 sq ft on Willen Field Road. A number of schemes have been developed around Heathrow Airport over the past 12-18 months and have attracted some interest. However, at mid-2017 there was only one scheme under construction within close proximity to the airport. SEGRO is developing Central Spacewaye Feltham and it has already attracted good interest with two units being pre-let in Q3 2017. In the short-term, the speculative development pipeline appears to be limited in both West London and the Thames Valley. As a result, we anticipate that supply will remain under pressure which will make for challenging conditions for corporates looking for space. Central Spacewaye, Feltham Central Reach, Willen Field Road, Park Royal 36,116 SEGRO 29,826 Daverlin Speculative schemes under construction in the Thames Valley at mid-2017 Scheme Size (sq ft) Developer Trade City, Reading 53,933 Kier Suttons Prime, Suttons Business Park, Reading SEGRO Park Southern Industrial Estate, Bracknell Slough Trading Estate 820, Yoevill Road Slough Trading Estate 772 Buckingham Avenue Slough Trading Estate 767 Henley Road Slough Trading Estate 700 Stirling Road Voyager, Aerospace Centre, Farnborough Egham Business Park, Egham 83,830 Aberdeen Standard 90,000 SEGRO 14,360 SEGRO 34,600 SEGRO 11,300 SEGRO 50,865 SEGRO 155,950 Canmoor & Royal London 70,726 Goya Reading 83,830 sq ft M4 Bracknell 90,000 sq ft Farnborough 155,950 sq ft Slough 111,865 sq ft Egham 70,726 sq ft M3 Heathrow 36,116 sq ft M1 Park Royal 29,826 sq ft London

10 Western Corridor industrial market report Autumn 2017 Western Corridor industrial market report Autumn 2017 11 Agents Insight West London: Greenford/Park Royal The A40 market, including Park Royal, Staples Corner, Acton and Greenford has continued to perform well throughout this year. Despite rent rises, occupiers are still attracted to this location due its proximity to central London with good road links to the A40, A406 and wider motorway network. The excellent rail links are also a huge appeal to occupiers with a number of mainline and tube stations serving the area. 2017 has seen continued success on recently constructed speculative developments in Park Royal. SEGRO s development the Quad at Tudor Industrial Estate is now fully let within 10 months of PC and GOYA s North Chiswick Business Park scheme has the last few remaining units under offer. Unit sizes on both schemes range from c. 5,000-12,000 sq ft and rents of 17.50+ have been achieved. The year has also seen the last remaining unit let at Phase 1 of SEGRO s flagship Origin development and June saw the practical completion of Canmoor & Aviva s Rock and Roll development on Waxlow Road. One more speculative development is currently under construction in Park Royal at Central Reach, Willenfield Road where a single warehouse of c.29,000 sq ft is due to complete in October. The Origin letting aside, the year to date has been characterised by a churn of existing secondhand units ranging in size from c. 2,000-12,000 sq ft. Based on the transactions that JLL has been directly involved in, average rents on good quality refurbishments of such stock have increased by 12% in the year to September with as much as 15% on units of below 3,000 sq ft. We are anticipating that the remainder of the year will see greater transactional activity in the larger 30,000 sq ft+ size bracket as more supply becomes available. The comprehensive refurbishment of Units 1 & 2 at Hermes Perivale Park (totalling c.70,000 sq ft) completed in July, c.50,000 sq ft is currently under refurbishment at Staples Corner Trade Park, Unit 1 at Tera 40 in Greenford will see c.61,000 sq ft become available in December and this follows substantial refurbishments earlier in the year at Unit B Premier Park (c.55,000 sq ft) and Chandos Place (c.60,000 sq ft). Whilst some occupiers need to stay located within the A40 (notably food occupiers which need good access to central London) and will have few qualms about paying market rents, we are witnessing certain occupiers, particularly those affected by HS2, being forced to move out of the A40 area and even outside of the to find cheaper accommodation. For example, we see locations such as Hayes and Slough benefitting from this migration, particularly due to improvements in connectivity with the opening of Crossrail in the next two years. The sentiment remains positive for the A40 market with consistently strong levels of demand the challenge remains to satisfy this occupier demand within the increasingly tight supply dynamic. James Miller +44 (0)20 7087 5764 james.miller@eu.jll.com West London: Uxbridge/Hayes 2017 has been a strong year for West London, with rental growth across all size ranges along this section of the M4 and throughout the Hayes/Uxbridge/Southall/ Heston/Brentford area. Growth has been driven by a lack of stock, particularly good quality secondhand accommodation, where the majority of take-up has taken place. The appeal of this market to occupiers is its proximity to Heathrow, its easy access to the, M4, M40 and A40, access into central London and its strong local workforce. The market has also benefited from the restricted pipeline along the A40, with a number of occupiers relocating here to save rent. However, we are now seeing the M4 corridor catching up with the A40 and becoming more restricted, with rents rising to similar heights in certain locations. The area has seen two key speculative developments recently complete. In March, RLAM completed Hayes 180, a four-unit scheme of 176,247 sq ft that has generated strong interest with units under offer. In addition, phase 1 of Prologis West London, which consists of 192,115 sq ft in two units completed at the end of 2016 and contracts have been exchanged on both units. The near-future development pipeline for the area is relatively restricted. Current opportunities include Prologis West London phase 2, which will concentrate on mid/big box units up to 273,178 sq ft, and SEGRO Park, Hayes which is likely to comprise 239,940 sq ft in four units and also concentrate on the mid/big box size range. There are currently no smaller/multi-let development opportunities where speculative development is being considered, highlighting the extremely limited pipeline. Earlier in the year, the Airport Property Partnership JV between SEGRO and AVIVA was wholly acquired by SEGRO, resulting in some significant change in this market. Part of this transaction saw AVIVA acquire a number of key West London estates including Stockley Close and Riverside Way, Uxbridge to add to its existing complimentary assets in the area and enabling it to develop more of a stronghold grouping of assets. Due to the low levels of availability and rental growth, many landlords are taking the opportunity to implement pro-active asset management strategies on well-located and good quality estates by actively creating voids to undertake refurbishments so that they can push rents higher. This has proven successful for many; for example, Capital Industrial has pushed rents on by over 30% at Heston Airlinks and the Heston Centre in the last year. Although total supply figures have increased as of June 2017 from the same time last year, these figures are slightly skewed by several larger units being available. The overall lack of quality stock across all size ranges in the area has also led to a lower total transaction volume through H1. However, market sentiment is strong, and we are seeing an increase in enquiries from occupiers with some key deals under offer so overall we are expecting the second half of the year to be much stronger than H1. Adam Creighton Associate +44 (0)20 8283 2522 adam.creighton@eu.jll.com

12 Western Corridor industrial market report Autumn 2017 Western Corridor industrial market report Autumn 2017 13 Agents Insight West London: Heathrow The Heathrow market remains resilient, although we have had a slightly quieter than expected first half of the year in terms of concluded transactions, particularly on the larger size bracket of stock. In terms of supply, there is now more new build stock replacing secondhand stock on the market so overall supply has increased but with a smaller number of larger buildings making up the additional supply levels. There has been a flurry of secondhand and new build take-up in the mid-size bracket (20,000-50,000 sq ft). However, with a lack of stock in these size ranges, typically secondhand occupiers are now having to consider new units. SEGRO has successfully agreed two lettings, prior to PC, on its new scheme at Central Spacewaye on the North Feltham Trading Estate with pre-lets to William Hill (25,000 sq ft) and Satair (19,000 sq ft). Both deals are rumoured to be at 15 psf and this leaves one unit of 36,116 sq ft remaining available at the scheme which will PC later on this month (September). Requirements for larger units were quiet over the summer break period but we now seem to be coming into a busy period again with larger enquiries coming through and more agent-led requirements coming in. Viewings have also increased again particularly on the larger end of enquires. 3PLs seem to be chasing a number of airport-related contracts, all of which need to be satisfied within the next six months, which is positive. We understand there are also several larger confidential transactions rumbling on which will be good for the Heathrow market once all completed. Going forward, freight forwarders are already expecting a busy second half of the year with cargo tonnage coming into Heathrow increasing again and there is now a lack of on-airport facilities available. We therefore, anticipate that this demand will be satisfied close to the airport but not on airside. Sectors currently active include freight forwarders, airline caterers, which are catering for bigger planes and also larger airline catering contracts, and engineering airport- related companies. Melinda Cross +44 (0)20 8283 2591 melinda.cross@eu.jll.com Thames Valley Confidence appears to be high across most industrial sectors in the Thames Valley with the highest demand being from online retailers and logistic operators, but R&D and engineering requirements have also picked up. Both Chineham Business Park and Winnersh Business Park only have a single warehouse unit available, and in each case these provide c.20,000 sq ft, which represents the lowest void level for over five years. To take advantage of the increased demand from the R&D and engineering sector, a new warehouse development called 'Hi Tech Frimley' has been undertaken by Investream to provide four units with 50% offices and two units with an office content of 30%. Two of the 50/50 units have been pre-let separately at a headline rent of 14.00 psf and the remaining four units are attracting strong interest. With strong demand and limited stock being available in all towns across the Thames Valley, developers are still pushing ahead with new speculative buildings. SEGRO is constructing four new units on the Slough Trading Estate to provide 11,300 sq ft, 14,360 sq ft, 34,600 sq ft and 50,865 sq ft respectively. These are due to PC in early 2018 and are being offered at rents from 13.25 psf to 14.25 psf. In addition, Kier is now on-site at Trade City, Reading building 12 new units ranging from 3,660 sq ft to 7,190 sq ft which are due to PC in Spring 2018 and are available at an asking rent of 14.50 psf. SEGRO is close to completing a new single speculative building at SEGRO Park, Bracknell to provide 90,000 sq ft, at an asking rent of 11.50 psf. Canmoor is building out five new units at Voyager, Farnborough to provide units ranging from 15,850 sq ft to 58,860 sq ft, which are due to PC this year and are being offered at a rent of 10.50 psf. Canmoor is also speculatively building seven new units at Nexus Park, Newbury which provide units ranging from 11,000 sq ft to 75,000 sq ft with PC due in December. These units are available at a rent of 9.50 psf. There have been few larger transactions to report over the last 12 months, simply due to very limited stock. However, some key transactions have taken place along the M4 corridor including: Signia Park, Didcot owned by Graftongate, where a new 242,000 sq ft build to suit unit was leased by Hachette on a 15-year lease at a rent of 7.25 psf; and a pre-let of 80,000 sq ft to Volution on Suttons Prime (which is owned by Standard Life) at a rent of 11.25 psf on a new 15-year lease without breaks. Most recently, Peel Logistics has let 73,000 sq ft to Argos at Island Road, Reading at an asking rent of 11.75 psf, but terms are yet to be reported. We have seen significant rental growth throughout the region which we expect to continue over the next 12 months as supply is unlikely to outstrip demand in the near future. High Wycombe, Maidenhead, Reading, Frimley and Bracknell have seen the highest uplifts. With rents increasing throughout the region and demand outweighing supply, we anticipate that more landlords will continue to undertake speculative development, rather than holding out for pre-lets over the course of the next 12-18 months. Shaun Rogerson +44 (0)20 7087 5307 shaun.rogerson@eu.jll.com

14 Western Corridor industrial market report Autumn 2017 Western Corridor industrial market report Autumn 2017 15 Investment market Market Area Investment appetite for the industrial and logistics assets has continued to gain traction throughout the course of this year and shows no signs of abating in the near term. Along with the usual UK institutional investors looking to invest into the industrial market in West London and the Thames Valley, the market is also attracting interest from Councils, Charitable Trusts and foreign investors. The industrial investment market continues to be supported by a strong occupational market of healthy demand and limited supply, which are driving rental growth. In the first half of this year total UK industrial investment volumes in both single let and multi-let assets totalled 3.2 billion, which was 70% up on the second half of last year. This demand is being driven in part by expectations of superior performance which is supported by our latest forecasts of the MSCI (IPD) sector. In the next five years (2017-2021) we forecast that the UK industrial sector will deliver a total return of 8.8% pa-ahead of both the retail and office sectors, at 5.5% and 5.3% respectively. However, as has been the case for a number of years, the investment market is still constrained by a lack of stock in the market and this is driving competition for the assets that are available and putting pressure on yields. Over the first six months of this year a number of transactions were concluded across the Western Corridor. For example: In May 2017 Royal London purchased Orchard Business Park in Woking for 20.8 million reflecting a net initial yield (NIY) of 4.45%. The scheme totalling 76,780 sq ft reached practical completion in February 2017 and had secured three pre-lets at the time of purchase. In July 2017 London Metric forward funded the purchase of Logistics City Frimley from Kier which had one pre-let at the time of acquisition. The 62,000 sq ft scheme is due for completion in May 2018 and was sold for 12.2 million at a NIY of 5.30% Reflecting the strength of the industrial market, industrial yields have moved in over the past 12 months in the Western Corridor. At mid-2017, prime industrial yields in West London stood at around 4.00-4.25%, in c. 25bps over the year and prime yields in the Thames Valley stood at 4.50-4.75%, in from 5.25% 12 months ago. We believe that there is the potential for yields to move in further in the Western Corridor over the next 12 months. High Wycombe Reading M4 M3 M1 Thames Valley West London Maidenhead Bracknell Wokingham Camberley Windsor Slough Uxbridge Wembley Park Royal Langley Greenford Southall Heathrow Brentford Egham Hounslow Staines Weybridge Outlook Basingstoke Farnborough Overall we remain strongly positive around the outlook for the Western Corridor. Despite a slowdown in total floorspace taken up across the market in the first half of this year, the churn of smaller units is still taking place and demand for these units together with very limited supply overall, is pushing on rental growth. New speculative development in the mid-box size range is attracting a lot of occupier interest and units are being taken up quickly. The investment market remains very hot on the back of good fundamentals in the occupational market and relatively strong rental growth forecasts. As a result, the Western Corridor continues to provide good opportunities for developers and investors and looking ahead over the next few years we expect this to remain the case. The map shows the boundaries of the survey area. It is divided into West London and Thames Valley and then into submarkets. The submarkets are known by the name of a key town, although other towns and areas fall within them. Data employed is derived from various information sources collected by JLL Research. Definitions Take-up: Floorspace acquired for occupation by lease, prelease, freehold or long leasehold sale. Units over 2,000 sq ft. Supply: Floorspace on the market and available for occupation. Units over 2,000 sq ft. Grade A Rent: The JLL view of the highest rent achievable for Grade A space in a prime location, without any adjustment for incentives. Building Classes: Grade A: Well located and good specification, generally new or less than five years old.

Contacts Agency Andy Harding Lead +44 (0)20 7087 5310 andy.harding@eu.jll.com Melinda Cross +44 (0)20 8283 2591 melinda.cross@eu.jll.com Shaun Rogerson +44 (0)20 8087 5307 shaun.rogerson@eu.jll.com James Miller +44 (0)20 8087 5764 james.miller@eu.jll.com Adam Creighton Associate +44 (0)20 8283 2522 adam.creighton@eu.jll.com Investment Sam Fairbairn Industrial National Investment +44 (0)20 7087 5382 sam.fairbairn@eu.jll.com Research Jon Sleeman UK Research +44 (0)20 7087 5515 jon.sleeman@eu.jll.com Tessa English Associate UK Research +44 (0)20 7087 5521 tessa.english@eu.jll.com Raphaele Naud Research Analyst UK Research +44 (0)20 3147 1135 raphaele.naud@eu.jll.com Offices London - West End 30 Warwick Street London W1B 5NH +44 (0)20 7493 4933 Western Corridor 8 The Square Stockley Park, Uxbridge UB11 1FW +44 (0)20 8759 4141 jll.co.uk/industrial-logistics 2017 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to JLL and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of JLL and shall be kept confidential. Reproduction of any part of this document is authorized only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of JLL. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof.