The North West industrial investment market experienced a moderate contraction in the first half (H1) of 2024, compared with the five-year average, with total transactions amounting to approximately £538 million – 7% below the five-year H1 average (£579 million). This is according to a new report by industrial and logistics property consultancy, B8 Real Estate.
Key highlights
- Transaction volume: The total value of North West industrial transactions in H1 2024 stood at £538 million across 32 deals, down from £979 million across 29 deals in H1 2023. However, excluding the major £480 million acquisition by Blackstone in H1 2023, the H1 2024 figures are higher than the previous year of £499 million based on 28 deals.
- Market dynamics: Demand was strongest for prime assets and those with short-term value-add opportunities. In contrast, secondary, tertiary, and ‘dry income’ opportunities saw the weakest demand. The market’s supply remained restricted due to investors holding assets in anticipation of future pricing improvements.
- Pricing trends: Overall pricing remained depressed, with a widening gap between prime and secondary assets. Speculative funding opportunities were challenging but feasible for high-quality schemes with low land values.
- Investor activity: Despite the overall decline, investor interest in the North West industrial sector remained robust, particularly for value-add assets and the Industrial Open Storage (IOS) sub-sector. Overseas investors continued to dominate the institutional market, with significant activity from US buyers, including Blackstone, Cabot, Clarion Partners, and Mirastar/KKR.
Joe Sinclair, associate director, investment at B8RE, commented on the results: “The North West industrial sector had a relatively stable H1 2024 in terms of pricing and performed well compared to other property sectors. Arguably, the biggest challenge of 2024 has been the lack of opportunities available to investors, stifling activity and the availability of comparable pricing.
“While investors have remained cautious, there remains a significant amount of capital continuing to back the industrial sector, with many investors highlighting the North West’s strong occupational market and future rental growth.”
Occupational market overview
The North West industrial occupational market experienced a slight increase in uptake in H1 2024, compared to 2023. However, with limited speculative development expected to commence in H2 2024, it is expected that supply will tighten further, particularly in prime locations.
Key highlights
- Occupational market: The H1 2024 take-up of big box units (more than 90,000 sq. ft.) totalled 1.28 million sq. ft. across eight transactions, with expectations for improved take-up in H2 2024. Year-end take up figures predicted to be broadly in line with pre-Covid years, 2019/2020 (circa 3 – 4 million sq .ft.).
- Rental growth: Record headline new-build rentals continue to be achieved with prime Big Box rentals now at £10.00 per sq. ft., with quoting rentals at £10.75 per sq. ft. Across the multi-let industrial (MLI) sector rents up to £18.00 per sq. ft. have now been achieved in Trafford Park (5,500 sq. ft.)
Speaking about the results, Will Kenyon, job title of B8RE, commented: “While the figures for occupational demand have only shown a marginal increase in H1, we predict the year-end figures will see a further improvement. There is more than one million sq. ft. of space currently under offer, including several large – 300,000 sq. ft. and over – requirements live in the market.”
