East Midlands dominates UK Big Box demand

The East Midlands has dominated UK big box demand for the past two years, according to a new review published by Avison Young.

In terms of the national picture, demand for major distribution units decreased last year following the spectacular highs seen in 2018, but there has been an increase in demand for new speculative units in a market where design and build dominates.

Encouragingly, the East Midlands has been the leading region for the past two years, accounting for 7.4 million sq ft of activity in 2019. London, the South East and East had the next busiest year, with 6 million sq ft. Both regions performed well above their respective five year averages and together accounted for almost two thirds of total activity.

The retail sector led activity in 2019 with the largest deal being a 1.75 million sq ft pre-let at Summit Park, Mansfield.

Supply of grade A units in the region now stands at 7.4 million sq ft, an increase of 10 per cent on the first half of 2019 and equivalent to 14 months’ supply based on the level of demand for the past five years. The increase in availability is a combination of increased speculative supply (4.4 million sq ft in total) and a number of occupiers continuing to take large design and build units.

The total volume of investment for distribution warehouses across the UK amounted to £2 billion during H2 2019 – a significant improvement on the first half of the year. This brings the total for the year to £3.22 billion, just 1 per cent down on the five-year average. Key to activity were investments between £30-£90 million, which included Gazeley’s purchase of three buildings at Panattoni Park in Northampton for £87 million.

Investment volumes in the East Midlands reached £759 million overall.

Robert Rae, principal and managing director at Avison Young, said: “Now there is a clearer political outlook, we are seeing greater business confidence, a release in pent-up demand and more transactional activity. We expect this to continue, certainly for the first half of 2020. A number of companies will bring forward their property plans which we expect to be reflected in healthy take-up figures.”