A shortage of industrial units is threatening growth in the Midlands’ economy, according to a leading industrial agent.
Kenny Allan, Director of Industrial Agency at Birmingham independent commercial property agency KWB, says that the Midlands industrial market continued to thrive in 2017, seeing an increase in rents, spurred on by strong demand and a lack of supply. However, an increasing shortage of industrial warehousing and manufacturing stock is impacting negatively on the growth plans of Midlands’ businesses.
Mr Allan says: “As in 2016, the availability issue in the Midlands is most prominent for industrial SMEs. Numerous estates are fully let, and have been for some time. Many large industrial funds are reporting that their void rates are lower than three per cent. While having a well let portfolio is enviable for most landlords, having such a low void rate restricts opportunities to allow tenants to grow within their ownership. Unfortunately, this situation is unlikely to improve with less than a handful of multi-tenanted industrial developments presently under construction.
“Occupiers are being sold short by this lack of stock. It is having a negative impact on many businesses as they are not able to grow efficiently under one roof. Medium sized companies are not having the opportunity to upgrade to new bigger units, and this is then not freeing up the smaller side of the market to allow newer businesses to flourish.
“For those companies that can find new larger premises, the shortage of units continues to push up rents. We expect that rents for new Midlands’ medium-sized industrial units (35,000 to 50,000 sq ft) will continue to rise above £7psf in the next few months, with some better-quality units at the smaller end of the market already in excess of £8psf.
According to Mr Allan, lack of development land is one of the major obstacles stopping the building of more units suitable for SMEs.
He says: “The complexities in acquiring land capable of development seem to be on the increase and it really is stagnating development. Recently we have seen the refusal of a planning application to extend Magna Park which is regarded as one of the country’s premier warehousing locations.
“The industrial and warehousing market is crying out for new stock and there should be a push at Government level to free up land. It is obviously very contentious to consider developing green belt land for warehousing and manufacturing uses, however when there are no other deliverable options, this must be considered, as this situation will soon start costing jobs.”
