Rents for prime industrial units in Birmingham have increased by nearly ten per cent in the last year, new figures from CBRE have revealed.
Increased occupier demand coupled with a lack of supply of modern, well-located stock has pushed rents above £5.75 per sq ft, with quoting rents reaching £6 per sq ft for new speculative units.
According to CBRE’s latest EMEA Industrial and Logistics Rents and Yields MarketView, despite the year-on-year increase, rents for prime industrial space over 100,000 sq ft in Birmingham are still cheaper than in Edinburgh, Glasgow, London and Manchester.
London is the most expensive at £12.50 per sq ft, followed by Glasgow (£6.50), Edinburgh (£6) and Manchester (£5.95). All regions are reporting a significant lack of Grade A stock.
Richard Meering, senior director in CBRE’s industrial agency team in Birmingham, said: “It’s not surprising that we’re starting to see rents increasing for prime industrial stock. Occupiers have been active during the first half of 2014, with take-up in the West Midlands alone totaling
1.52 million sq ft. Combined with the East Midlands, total take-up across the region was
3.45 million sq ft.
“With good take-up over the summer period, there is now less than 1.9 million sq ft of new space available across the Midlands. The disparity between supply and demand has resulted in upward pressure on rents, which will be compounded further as the remaining stock is taken up. The market has reached a critical point; we need more sheds.”
Mr Meering said there are a number of existing Grade A units currently under offer that will reduce supply further.
Supermarket chain Aldi has taken 120,000 sq ft at Centurion Park, Tamworth, while in the East Midlands Norbert Dentressangle has taken the 585,000 sq ft Bigfoot unit in Daventry. These follow JLR’s acquisition of a 225,000 sq ft speculative unit at ProLogis Park, Ryton.
Strong interest is reported on a number of other units including the 323,000 sq ft Citadel Junction in Bilston, Wolverhampton, and the new speculative units at Hinckley Commercial Park and Birch Coppice.
“Across the Midlands the erosion of large industrial and logistics units is continuing apace, with only a handful of properties over 100,000 sq ft left on the market. For occupiers, this leaves them with the option of either taking space in a secondary location or committing to a design and build project.
“Until we see more speculative development coming forward, the options for occupiers will remain limited with further upward pressure on rents.”