Industrial take-up across the Midlands remains robust

Take-up of industrial and logistics space across the Midlands (units of 100,000 sq ft +) reached 4.12 million sq ft in H1 2023, according to Savills latest Big Shed Briefing.

While this is down on recent years, take-up for the year to date surpasses the first half of 2019, signifying a return to levels seen prior to the pandemic.

Savills notes that supply for the region stands at 14.82 million sq ft, resulting in a vacancy rate of 6.6%, up from 2% a year earlier. Despite the rise in supply, continued activity and ongoing requirements mean that a significant proportion of remaining stock is already under offer, which will lead to a fall in the vacancy rate as deals complete.

Ranjit Gill, industrial and logistics director at Savills Birmingham, said: “Whilst we may have seen a number of occupiers pause for thought during this particular period of uncertainty, we saw a marked uptick in activity towards the end of the half and anticipate a number of significant deals in Q3/Q4 2023. We’re also tracking large requirements from occupiers committed to the ‘golden triangle’ and surrounding areas, a number of these businesses are seeking space of 500,000 sq ft or more.”

Savills goes on to note that the diversity of occupiers taking space in the Midlands remains mixed, with third party logistics providers (3PLs) accounting for 25% of activity, manufacturers taking 23%, grocery retailers 20%, wholesalers 15% and high street retailers 15%.

In terms of the development pipeline, there are currently 23 units under construction across the Midlands, totalling 6.45 million sq ft. By way of contrast, there were 37 units under construction a year earlier. Notably, the volume of space under construction has actually risen to 6.78 million sq ft with three units set to be over 500,000 sq ft. Savills believes the Midlands remains undersupplied in this size bracket with just one year’s worth of supply currently under construction.

Charlie Spicer, industrial and logistics director at Savills Birmingham, adds: “The Midlands may have traditionally been associated with sectors such as manufacturing and automotive, however the diverse mix of occupiers taking space this year indicates a well-balanced market and highlights the appeal of the region to occupiers from all sectors. Future supply could be constrained as the higher costs of capital may mean that developers will find it hard to fund speculative development going forward, particularly for the biggest units, of which we continue to see higher levels of demand in the Midlands.”