CoStar UK - The Leader in Commercial Property Information

West Midlands' long-term average industrial take-up eclipses East Midlands for first time

By Paul Norman - Thursday, February 08, 2018 14:38

The long term average for industrial take up in the West Midlands has eclipsed the east Midlands for the first time, according to Savills' latest Big Shed Briefing.

Strong occupier demand in 2017 saw total take up reach 5.86m sq ft in the West Midlands and 4.24m sq ft in the East Midlands, taking the long term averages to 4.22m sq ft and 4.02m sq ft respectively.

The firm reports that particularly robust take up in the West Midlands can largely be attributed to an increase in build to suit deals last year, bucking the national trend of decline.

Savills said: "Major transactions such as Meggit’s 440,000 sq ft acquisition in Coventry (subject to planning) and Kimal’s 140,000 sq ft acquisition in Worcester created a year in which 45% of all industrial deals were build to suit, compared to the region’s long term average of 32% and a national long term average of 31%."

Though full year industrial take up in the East Midlands was significantly down year-on-year, Savills says this was inevitable after the record 7.03 million sq ft of 2016. Like the West Midlands, the region contrasted with the national trend of decreasing build to suit deals by showing a rise in their proportion of overall take up to 68% from 64% in 2016. This was boosted by Decathlon taking 260,000 sq ft and Stanley Black & Decker taking 256,000 sq ft in build to suit deals, both in Northampton.

Regarding supply, Savills said the East Midlands has the most diverse offer of any UK region in terms of quality and is unique in that 72% of all supply is over 200,000 sq ft. A raft of speculative completions saw supply reach a peak for recent times of 5.05m sq ft in Q4 2017 and Grade A supply triple to 3.53m sq ft from just 0.79m sq ft in Q1 2016. This mirrors the West Midlands, where developers have responded to high demand by creating a robust current supply of 4.15m sq ft across 26 units, up from a critical low 2.21m sq ft in Q3 2016.

Ranjit Gill, industrial director at Savills Birmingham, said: “Industrial supply in the Midlands appears robust, but particularly in the West Midlands there is an imbalance in terms of size range and more units above 200,000 sq ft are certainly needed. Build to suit demand levels remain strong across the board and throughout 2018 we expect prime Grade A sites such as SLPEMG (East Midlands Gateway) and DIRFT III to absorb an increasing amount of the larger strategic national requirements.”

pnorman@costar.co.uk

Get in Touch
+44 203 205 4600