The West Midlands continues to lead the UK in industrial lettings, with over 5.5 million sq ft of activity completed in the region in 2017, according to GVA.
The East Midlands saw approximately 3.5 million sq ft of transactions over the course of the year, with the region as a whole making a significant contribution to the annual total of 20.6 million sq ft.
While this is below the record-breaking 27.5 million sq ft of activity seen in 2016 – which was driven predominantly by exceedingly acquisitive internet retailers – it is close to the 10 year average of 21.1 million sq ft.
The data comes from GVA’s latest industrial intelligence report. Published twice annually, the report focuses on investment and occupational transactions of modern and new units over 100,000 sq ft.
The Midlands recorded the largest transaction of the second half of the year, which saw 850,000 sq ft let to Eddie Stobart at Corby’s Midlands Logistics Park.
In terms of headline rents, the Midlands is recording values of £6.50-6.75 per sq ft, behind only the south east.
David Willmer said: “As demonstrated through this research, the Midlands continues to be one of the most attractive locations for industrial and distribution sector occupiers, with unparalleled access to transport networks. While it is always pleasing to see this level of activity in the region, it also underlines that one of the key issues in this sector remains that of supply.”
In the UK as a whole, there is currently available stock of around 24.3 million sq ft, which equates to circa 14 months’ supply. Within the Midlands, there is just under 12 million sq ft currently available at a range of locations.
This breaks down to availability of just under 6 million sq ft of stock in the West Midlands and slightly less in the East Midlands, with the 685,000 sq ft at Cross Point Business Park, Coventry and 375,465 sq ft at Cannock’s M6DC Kingswood Lakeside representing two of the largest available sheds in the region.
David Willmer continued: “While there is still a significant appetite for speculative development, there has been a slight reduction in new starts due to a combination of fewer opportunities as land availability tightens and some funds ensuring take-up of existing schemes before starting further development.
“Elsewhere, there is competitive bidding taking place for new sites, with much of the new supply coming to the market over the next few months likely to be from mid-sized speculative developments in the 30,000 to 80,000 sq ft space.
“Bucking this trend, however, is Birmingham City Council’s Peddimore development situated on the A38, for which the Council has recently announced IM Properties as a preferred delivery partner to realise the aspirations for the delivery of the first phase of the total circa 3 million sq ft of brand new space.”
Nationally, primary demand came from non-internet retail operators, which accounted for 28% of take-up. The manufacturing sector also benefitted from a weaker pound boosting export markets, leading it to comprise 25% of take-up. Third party logistics accounted for 24% of take-up, supported by Eddie Stobart agreeing 1.7 million sq ft of space in five deals, mainly close to the Golden Triangle.