JLL has been at the forefront of the Midlands Industrial deals this year, reacing circa. four million square foot of space in 2015 as retailers rush to gain distribution facilities in the Midlands.
The Midlands overall saw 5,102,933 Grade A taken up to Q3 against a national backdrop of 13.5 million sq ft – slightly higher than the level of demand recorded in Q3 of 2014 (13.1m sq ft). Two of the most significant deals include Lidl’s agreement with St Francis working with Opus Land to create a 450,000 sq ft distribution facility near Junction 9 of the M6 Motorway in Wednesbury and Dunelms’s built to suit deal with Prologis and joint venture partner Wittington Investments (Developments) for a 525,000 sq ft warehouse near Stoke-on-Trent.
Carl Durrant, director, Industrial & Logistics at the Birmingham offices of JLL said: “The market has really heated up in the Midlands driven mainly by retailers in particular, racing to maintain a foothold in a key distribution hub and marketplace with a 48% share of the total Grade A take-up in Q3.
“Online sales too continues to be a major driver for logistics providers as Omni-channel retailing grows in popularity and consumers demand for click and collect and same day delivery requires urban logistic centres close to major conurbations.”
JLL recently brokered two deals at Stadium Point and Merlin Park in Birmingham for UK Mail – a logistics provider right at the forefront of internet goods distribution.
Durrant continued: “Undoubtedly the surge in activity has got to mean speculative development will step up in the region. There can’t be any clearer sign that demand exists. Whilst pre-lets and build to suit have provided a safer stopgap for many landlords, the market now appears to be ready to take the leap to spec build and certainly the figures have been bolstered by more speculative development although availability of space has been on a downward trend for the past six years.
“We expect to see a lot of jostling for position for land in the coming months as many look to find the best positions and finally push the button. The industrial investment market remains very hot with a weight of money targeting the sector from both domestic and international investors.”
Regional prime yields stood at 5.00%. Prime yields remained unchanged at the end of Q3 compared with the end of Q2. Regional single let yields have moved 50bps over the same period.