News

26 Jun 2018

Demand for industrial units provides opportunity

Industrial and distribution space is in demand across many areas of the country providing a diversification opportunity for farmers with surplus agricultural buildings.

The key is to identify locations where there is ‘pent-up demand’ for industry or workshop space says Tim Davies from commercial property specialist Colliers International.

“Farmers who have large, under-used barns or other agricultural buildings are often in an ideal position to diversify into commercial property or ‘sheds’ as industrial warehouses are known,” says Mr Davies.

“The rise of e-commerce has created unprecedented demand in recent years for warehouse and distribution space and has resulted in a chronic shortage of industrial space particularly in areas such as the South West of England.

“Often farmers have large surplus agricultural buildings on their land or have space on their land which could accommodate large commercial premises. In both scenarios, subject to planning permission, this can present an opportunity to diversify.”

This type of diversification project allows assets to be leased rather than sold meaning they remain in family ownership, and the business can be managed in a way that allows farmers to ‘get on’ with the running the farm.

“This is something which can be done for a comparatively low initial investment compared to other diversifications, and even with low rents, there will be a good return with yields between 10 and 20% not unheard of.

“Farms with good access to main roads and motorways will be at a particular advantage for attracting industrial users because of their strategic location, but the shortage of industrial space in some areas means that even less accessible sites will attract demand from potential users,” he said.

Those looking to convert redundant buildings should seek professional advice to establish how viable a conversion would be.

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