Industrial rents on some new North West schemes are close to £20 per sq ft, compared with £12.50 four years ago, according to Sixteen Real Estate.
Industrial rents have risen for four years, and Sixteen is urging the government to tackle rising operating costs and provide the certainty businesses need to invest and grow in the upcoming Autumn Budget. Without action, it warns, continued uncertainty could push property decisions into 2027, delaying investment and putting regional growth at risk.
“The cost of occupying space is becoming a cost of growth,” said Andy Backhouse, co-founding director at Sixteen Real Estate. “On some new industrial schemes, rents are getting close to £20 per sq ft, compared with £12.50 four years ago. For a sub-10,000 sq ft unit, that’s an illustrative annual difference of £230,000 before business rates, energy and other operating costs.
“While buildings and locations are not always directly comparable, the gap shows how heavily property costs can influence occupier decisions. We’re still seeing activity in smaller units, particularly those below 5,000 sq ft, but demand for mid-sized and larger space has plateaued over the past 18 months.
“The Government cannot dictate market rents, but it can influence the costs on top of them, including business rates, National Insurance and employment costs. Ministers cannot talk about growth while ignoring the costs that can price it out of reach.
“The Government cannot overlook the impact of business rates on larger industrial and distribution premises. Applying a higher multiplier to properties with rateable values of £500,000 or more risks piling further pressure on businesses already facing tough decisions over costs. These are substantial commitments, and the rates bill can influence whether a business invests, relocates or puts expansion on hold.
“If occupying the right premises becomes prohibitive, businesses may look further afield, compromise on facilities or put expansion on hold. That is not a recipe for growth; it risks pushing investment away from the locations and premises where businesses need it most, not just property deals.
“The Autumn Budget must go beyond warm words about growth. It should address the costs the Government can influence and give businesses the confidence to plan ahead, not add another layer of uncertainty to an already difficult calculation.”
