The East Midlands accounted for the largest share of take-up of floor space in the UK in 2015 says JLL as it unveils its latest UK Big Box Industrial & Logistics research.
Take up within the region accounted for 29% of the total Grade A floorspace transacted in the UK, some way ahead of its regional counterparts. Across the rest of the UK, Greater South East (South East, East and London) accounted for a 21% share of total demand, the North-West 18% and Yorkshire & Humberside 13% of total demand.
Some of the stand-out deals in the East Midlands that contributed significantly to this figure include Markham Vale’s 480,000 sq ft letting to third party logistics business, Great Bear. Grupo Siro taking the vacant 330,000 sq ft Arrow at Worksop and Howdens committing to 670,000 sq ft at Wrath Park, Northampton.
In terms of sectors, overall retailers accounted for the largest share of floorspace taken up in 2015 (46%). Logistics were responsible for 30% of the total and manufacturers accounted for 15%. The East Midlands reflected this weighting with retailers leading the way on take-up with significant deals including John Lewis, Amazon, Ocado and The Range. This take-up was closely followed by the logistics sector with Great Bear, Clipper Logistics & UPS all taking large volumes of space in the East Midlands.
Compared with the average level of take-up over the last five years (2010-2015), available Grade A supply at the end of 2015 represented less than one year’s worth of demand. This has the potential to frustrate the market in the short term; however a sustained commitment to speculative development will continue to make a contribution to re-address the balance.
At the end of December 2015, the East Midlands accounted for 10 of the 32 big box units speculatively under construction nationally totalling 2.1 million sq ft. Many of these have seen commitment pre-completion with one of the most recent being the Ted Baker pre-let at Goodman and Anglesea Capital’s 323,895 sq ft speculative unit at Derby Commercial Park.
James Keeton director at the Nottingham offices of JLL said: “Whilst the East Midlands as a whole is seeing more speculative development come forward, the regions’ core locations still need more employment land to be made available to satisfy demand, especially from growing sectors such as urban logistic operators. 2016 will see significant schemes come forward such as the 100 acre Infinity Park at Derby and whilst this supply is welcomed, we anticipate demand will continue to outstrip supply in the Grade A market.
“Whilst more speculative development is expected in the region, supply will still be limited compared to demand and this will drive rental growth over the year.”
James added: “Labour availability will become a critical success factor for industrial occupiers, developers and investors. Nottingham and other key cities within the East Midlands are well placed to deliver on this front, however if we don’t have the supply occupiers will simply look elsewhere.”
