Shift towards qualify for industrial market, says Savills

The North West’s industrial market is undergoing a shift towards higher quality stock, according to Savills’ latest Big Shed Briefing, with 30% of available units classed as grade A.

This equates to 1.75 million sq ft, up from 15% (990,000 sq ft) of available stock classed as grade A in 2016.

The level of poor quality industrial space has also decreased in the last two years, with grade C units currently accounting for 960,000 sq ft of supply compared to 2.65 million sq ft in Q2 2016.

While there has been some occupier demand in this category, Savills says the decrease is predominantly linked to landlords choosing to withdraw or refurbish low quality stock.

The North West remains the UK market with the highest overall industrial supply at 5.89 million sq ft across 34 units, with an average size of 173,000 sq ft. However, based upon recent take-up levels of good quality units, the region has just 1.5 years’ worth of Grade A supply remaining, the lowest of any region outside of the M25.

With take up of ‘big sheds’ (those over 100,000 sq ft) reaching 2.7 million sq ft in 2017, the total was below the North West’s long term annual average of 3.5 million sq ft.

Despite this, Savills reports that at 15 the total number of deals was in line with the long-term average, demonstrating that there is still a strong level of churn in the market.

Build-to-suit take up fell to its lowest level since 2009 at just 327,000 sq ft last year, which also contributed to the below average take up.

Jonathan Atherton, industrial director at Savills Manchester, said: “The consistent level of deals concluded in 2017 underpins the steady performance of the North West’s industrial sector. There are a number of larger deals in the pipeline for 2018, pointing to a robust year ahead.”