Manufacturing and distribution demand drives commercial property boom in the Midlands
THE 100,000 sq ft plus market for industrial units remains buoyant in the Midlands – and well above the UK average, latest studies have confirmed.
Demand for the units is being led by the industrial – especially manufacturing – and distribution sectors. Lettings of 9.2m sq ft were achieved last year – an 18% increase on the five year average.
This is against a national picture of 21m sq ft of transacted stock, 5% above the five year average.
Traditional and internet retailers led the market with 40% of all transactions in this sector, with non-food retailers Amazon, Staples, Dunelm and Smyths Toys all taking space in excess of 500,000 sq ft and the largest deal of the year – 650,000 sq ft at Warth Park in Northamptonshire – being taken by kitchen supplier, Howdens.
The trend looks to be continuing with Amazon already committed to take a further 1 million sq ft unit at Bardon, Leicestershire.
Automotive manufacturing remains particularly positive, accounting for 16% of regional take-up and driven by the “JLR Effect” and the need for its supply chain to keep pace with demand.
The OEM itself has taken out 470,000 sq ft in Minworth, near Sutton Coldfield.
However, the growth has also highlighted a lack of suitable property, with predictions that the region only has enough space left to meet demand for another 12 months.
Real estate adviser Bilfinger GVA has said that a resurgence of speculative development is helping to redress this balance, with over 5.75m sq ft of speculative units under construction or due to start imminently across the Midlands.
Ongoing changes to the nature of the sector – including the continued prominence of online retail – are starting to have a strong impact on occupiers’ requirements and the design and delivery of these new units, the firm has concluded.
David Willmer, senior director in the Bilfinger GVA Midlands industrial and distribution team, said: “Alongside more established trends such as proximity of supply chain providers to end manufacturers there is also a growing development of consolidation centres such as DHL’s 500,000 sq ft facility adjacent to JLR’s Castle Bromwich plant.
“This enables one logistics provider to receive, store and sort components from suppliers and deliver them to match precise ‘just in time’ manufacturing requirements.
“The continued popularity of online retailing is driving a requirement for parcel hubs, with companies like DPD absorbing many circa 60,000 sq ft units and, as in the case of their recently opened Hinckley facility, a 264 door, 300,000 sq ft super-hub.
“Changes in order profiles are requiring more flexible delivery methods for a wide range of different goods through online and click-and-collect models, as well as having the capacity to handle returns. This facility is something that logistics companies will need to either build into their existing premises or – as is the case with the current circa 300,000 sq ft that iForce has in the Midlands – deliver a specific building to handle returns.”
The combination of a rise in the volume and speed of goods passing through a variety of industrial spaces is also shaping occupiers’ thinking around efficiencies to ensure that they are able to keep pace with demand.
