More than 5.5m sq ft of industrial and logistics space was let in the Midlands in the first half of 2016, a record for the region, according to new research from CBRE.
The figures reflect take-up in the 100,000 sq ft+ market and represent more than 40 per cent of the country’s overall take-up.
According to Richard Meering, who heads CBRE’s award-winning logistics and industrial agency team in Birmingham, the statistics cement the region’s reputation as the location of choice for many logistics operators and manufacturers.
He said: “The Midlands is the ‘Mayfair’ of sheds. It is home to the country’s biggest warehousing units and the epicentre of its distribution network. This is reflected in the record levels of take-up we have seen so far this year and the consistent levels of commitment to the region.
“To put this year’s market into perspective, total take-up in the region for 2015 was circa seven million sq ft, so this has been a very healthy start to the year.”
Among the deals contributing to the 5.61 million sq ft total take-up in the Midlands were JLR’s commitment to a further 468,955 sq ft across two units at Prologis Park in Ryton, Coventry; retailer Ted Baker’s acquisition of 325,000 sq ft at Angle 325 at Derby Commercial Park, and Boden’s pre-letting of 275,220 sq ft at Wilson Bowden’s Optimus Point in Leicester.
The East Midlands accounted for 23 per cent of total UK take-up – the highest in the country, with the West Midlands taking second place with 19 per cent.
The high level of take-up has had an impact on stock levels. Availability of existing units, speculative stock and oven ready sites have all been significantly eroded.
According to CBRE, of the 1,926,193 sq ft of recently completed speculative stock, in the 100,000+ sq ft bracket, more than half is now either under offer or the subject of strong occupier interest. There is a further 1,872,438 sq ft of new space currently under construction, most of which has good interest.
Richard said: “Over the last few years average void periods for speculatively built stock have shrunk to low levels, removing much of the risk associated with building without a pre-let.
“At the current level of take-up we have less than six months worth of supply, and in parallel to the low levels of grade A stock there is a significant scarcity of oven ready sites across the Midlands with planning consent that can accommodate large bespoke distribution units. There’s a real danger we will lose occupiers to other parts of the country.
“Rents on prime sites have now reached £6.50 per sq ft, reflecting high levels of demand. What’s more, despite concerns over the impact of Brexit, occupier demand since the vote has remained encouragingly strong with good level of new enquiries and significant further pre-lets in solicitors hands.”