Strong start to 2019 North West industrial property market
The industrial agency team at CBRE in Manchester has reported a strong start to the 2019 North West industrial market.
The burgeoning online retail and third party logistics sectors took the lion’s share of space in 2018, and further demand is expected in 2019.
The market is also seeing a growing need for more regional speculative development to meet the continued increasing demand.
Take-up in the North West industrial market showed 3.42m sq ft transacted of units over 100,000 sq ft (10m+ eaves), up on 2017 which was 3.1m sq ft.
This is above the long term average of 3.2m sq ft and, if units of less than 10m eaves are included, take up for 2018 rises to 4.25m sq ft. Of this 49% was design-to-suit and speculative.
CBRE anticipates demand to continue through 2019, predominantly led by the online retail sector which accounted for more than 31% of UK logistics take-up in 2018.
Third party logistics operators were also very active, and together with the online sector, accounted for more than 50% of transactions.
There continues to be a supply shortage of Grade A space which is reflected in the high levels of take-up of second-hand units where occupiers have been forced to take compromised units.
While there are a number of units being speculatively developed, it is expected these will attract significant occupier interest.
The majority of speculative development has been between 100,000-250,000 sq ft, however, CBRE is now seeing an increase in demand for developments in excess of 300,000 sq ft, with a number of speculative and good quality second-hand units transacted recently.
CBRE expects demand for developments in this size bracket to continue, together with an increase in demand for larger units of 500,000+ sq ft, which has led to the speculative development of 525,000 sq ft at Haydock.
Steve Capper, director at CBRE Manchester, said: “We are pleased to report a strong start to the North West industrial market this year.
“We have no doubt that Brexit will play a part in 2019, however, we have yet to see any significant deals put on hold due to the uncertainty.
“On the flip side, we have not yet seen any upturn in demand for stockpiling or new manufacturing facilities from pan-European businesses.”
He added: “On the whole, the outlook for 2019 is positive.
“With demand strong in January, developers are continuing to commit to new schemes and upwards rental pressures are continuing due to the restricted supply.”