Research by Colliers International reveals that available large scale Grade A industrial and logistics space of more than 100,000 sq ft in the North West of England will run out in early 2016, with the region having just nine months’ worth of supply left.
Although the North West has sufficient supply of such premises to see it through the remainder of 2015 – compared for example with the West Midlands where such supply is due to expire in early July 2015 – the increasing gap between supply and demand should not be underestimated, warned Colliers International.
Julien Kenny-Levick, director, industrial and logistics at the Manchester office of Colliers International, said: “Businesses seeking Grade A big sheds in excess of 100,000sq ft in the North West face a potentially very unhappy new year. While new stock is feeding through with developers on site to build speculatively and others seeking funders so they can start work, the amount of available and ready to occupy space needs to be much more to meet demand.
“The state of the market therefore remains worrying and quite stark for potential occupiers and there’s little evidence of the picture changing markedly in the next nine months.”
At the end of the first quarter of 2015, there was an overall total of 9, 982,100 sq ft of large industrial accommodation including Grade A sites available in the North West, down by 147,890 sq ft from 10,130,000 sq ft in the second half of 2014.
The amount of large Grade A available space within the overall total for the North West is 856,707 sq ft – down from some 1.3 million sq ft a year ago – and equating to approximately nine months of supply for the region.
Mr Kenny-Levick added: “Throughout the past five years in the North West and elsewhere in the UK we have seen little new development within the big shed arena and most of the deals have been secondary stock.
“While speculative and pre-lets are returning to the market, most occupiers’ requirements within key and growing sectors such as automotive and the multinational food and retail sectors aren’t being adequately met. What we are seeing instead is existing stock being retrofitted and adapted to satisfy operational needs as with B&M’s deal for the 350,000 sq ft Onxy 350 distribution centre at Runcorn, Cheshire.
“We have seen the balance of power move from the occupier to the developer because of the lack of existing good quality stock. Rents have started to show signs of moving upwards with incentive packages being compressed.”
