The North West continued to see the highest levels of activity amongst the UK regions, with 13.3m sq ft of take-up in 2013. Activity was up 6% on the previous year’s levels and is expected to reach record highs this year, according to Lambert Smith Hampton’s (LSH) latest research report, Industrial and Logistics Market 2014.
This increase in demand is due to the continued economic recovery, an improving manufacturing sector, the ongoing drive by retailers to streamline their supply chains and growing appetite from logistics businesses serving the burgeoning e-commerce industry.
In 2013, companies such as Travis Perkins, B&M Bargains and Regatta all took expansion space in the North West. Logistics provider, Hermes UK also expanded its national portfolio in the region, acquiring a build to suit development of 153,600 sq ft for a new distribution hub at Omega North in Warrington.
The report also finds that improving occupier appetite, combined with a lack of development activity that stretches back to before the global financial crisis, has led to a shortage of top quality (grade A) space across the region. Grade A now represents just 9% of total available supply, down from a peak of 20% in 2009.
Take-up of mid box sized units (50,000-99,999 sq ft), fell significantly with overall activity in the North West down 39% on the previous year. This is largely due to the acute shortage of grade A space of this size in the region.
By analysing current demand and availability, the report identifies the North West as one of the top 5 regional cities most likely to see rental growth over the coming year, as well as the mid box (50,000 – 99,999 sq ft) and large building (100,000 sq ft +) size bands.
Andrew Aherne, Head of Industrial & Logistics in the LSH Manchester office commented: “The revival of the Mid Box market (50,000 to 99,999 sq ft) continues with both manufacturers and particularly internet related logistics companies taking space in this category. Traditional retailers are also looking to streamline their supply chains in order to improve speed to market and boost margins at a time when price rises are proving difficult to implement.
“On the back of growing demand, an acute shortage of grade A space within the region, and the renewed availability of funding, we will see the return of meaningful speculative development for the first time since 2007/8.”
