Johnson Fellows is reporting a desperate shortage of available industrial/warehouse premises across the Black Country region.
The latest information provided by the Birmingham-based chartered surveyors brings home the extent of the shortage.
The lack of supply will have a knock-on effect on the wider economy with companies unable to expand promptly and the design and build process taking a minimum of 12 months to provide a building fit for purpose. However, the most acute shortage appears to be within the multi-let industrial estate sector.
Johnson Fellows, which acts for Logicor across its UK portfolio of industrial estates, is reporting that all of its Black Country estates are now fully let.
This portfolio is diverse in its locations across the Black Country sub-region whilst also containing a range of unit sizes from 600 sq ft up to 100,000 sqft. As such, the 100% occupancy rate shows a wide and sustained trend across all property sizes.
Indeed Richard Phillips, UK Portfolio Director at Logicor said: “There is an under supply of new and used industrial space across the UK and with a strong demand from the occupier market, has resulted in our Black Country stock being fully let.”
This is not isolated to just one portfolio and Johnson Fellows has undertaken soundings from other substantial commercial property owners in the Black Country.
LCP, which owns industrial estates across the Black Country including the Pensnett Estate, Kingswinford, which is one of the largest secure business sites in the UK, currently has voids of less than 5% on the site within excess of 2.3 million sq ft of commercial property.
Andrew Preston, industrial portfolio manager for LCP, said to meet the demand of would-be occupiers at its flagship business estate, it is now working on the first stage of a major speculative development called Prime Point, at Pensnett.
The first units will be delivered in August this year and the total development is expected to be completed in December 2017. It will comprise four industrial and warehouse units totalling 130,000 sq ft, and potential tenants will be able to take units between 10,000 sq ft and 40,000 sq ft.
“We recognised there was a real need for units of this size and have committed to investing significantly in Prime Point to help meet demand. We’re already getting interest in the development and are confident that this first phase will be very popular” he said.
A and J Mucklow Group Plc has seen also good demand for units in its Black Country portfolio.
Stuart Haydon, Portfolio Manager, said “We have over 130 units and 1.1m sq ft of total industrial space within the Black Country, with the majority located on multi-let estates in well-established areas. We have seen occupancy levels at an all-time high in the past 12 months, with five Black Country estates now fully-let, and with the ongoing lack of availability, we cannot see this changing significantly any time soon.”
Mike Price, partner in the industrial agency team at Johnson Fellows, said: “Naturally, high occupancy rates are excellent news for commercial property owners. However, our concern is the lack of available accommodation for expanding or new businesses. There is clearly pent up demand and we would not like to see businesses leave the region whilst trying to seek appropriate commercial premises.”
Johnson Fellows is encouraging the development market to take up the slack. The firm cites only limited amounts of speculative development, notably by LCP at Pensnett Trading Estate and Chase Commercial in Kidderminster. However, there has not been widespread development of small and mid-sized units across the region for at least two decades.
“Due to the lack of available accommodation, rental levels have increased across the sub-region whilst investment yields have hardened making the financial uncertainty of constructing speculatively far more attractive in the current climate,” added Mike.