Shortage of industrial land is a “gripe beginning to lose its impact”
Harris Lamb’s Charles D’Auncey explains how developers are rising up to tackle the Midlands stock shortage challenge
For almost two years, we’ve heard the same lament from commercial property agents across the Midlands – and I include myself in that number – about the lack of industrial stock within the West Midlands and the fact that demand from occupiers continues to outstrip supply.
But our much-repeated gripe is beginning to lose its impact. Every month sees a new investment plan to address the shortage unveiled; and it adds up to an exciting time for the region. More than once in recent weeks I’ve read dire warnings and foreboding forecasts that the second half of 2017 will see commercial space availability within the Midlands dry up altogether, and I couldn’t disagree more.
Demand within the West Midlands is so high that schemes are being snapped up at or around completion. The region has the highest take-up level for units let during construction within the UK, and as such, there is more speculative development coming through, with 2.1 million sq ft already being under construction by the close of last year and a further 1.3 million sq ft planned for the latter part of this year and early 2018.
Speculative schemes close to completion include Stoford’s Carbon 2017 in Coventry and Exeter Property Group and Graftongate’s 372,000 sq ft cross-dock facility – M6DC – at Kingswood Business Park in Cannock.
Last month, Liberty Property Trust and Stoford unveiled the first long-anticipated, speculatively developed buildings at Worcester Six, and just as we’d hoped, other developers have followed their lead, identifying key pockets of opportunity within the region and committing to deliver industrial schemes.
Plans have been announced by IM Properties, with a commitment to invest £26m into bringing more than 200,0000 sq ft of industrial space to Blythe Valley Park by the third quarter of 2018, while Prologis at Lichfield is developing 213,500 sqft speculatively at Prologis Park, Fradley.
We’re currently experiencing high levels of interest in the 24,000-120,000 sq ft warehouses Ropemaker Properties is developing at Kingpin Industrial park in Tysleley further to agreeing the pre-let on a 15,000 unit to SIG Ltd. Location and size is proving a massive draw to the region, and with the buildings being delivered from Autumn this year, occupiers are expected to be in situ within a matter of months.
Moreover, developers aren’t just appealing to established tenants with ambitious requirements: Chase Commercial has recognised a niche in the market for smaller and younger businesses seeking starter units, with work being well underway to deliver 11 units up to 2,100 sq ft at Ratio Park in Kidderminster imminently, with plans for a further phase offering 2,500 sq ft to 10,000 sq ft warehouses in the pipeline further to their completion.
Finally, the necessity for high quality new stock has motivated existing landlords across the West Midlands to improve their own offerings, seeing a raft of investments to refurbish shabby or neglected industrial estates to a high-spec ‘as new’ calibre, in order to both retain existing tenants and attract new occupiers, while enabling them to seek higher rents and longer-term leases.
The commercial property landscape hasn’t looked this healthy in 10 years, and with the new Mayor of the West Midlands Andy Street’s intention to improve transport links both within and to the region, I’m convinced that more developers will seek opportunities to invest in other areas within the region to fulfil the rising demand.
