Bumper first half for North West industrial property market
The North West industrial property market has enjoyed another bumper first half in 2022, says specialist agents B8 Real Estate.
In the first six months the region has registered more than half a billion pounds-worth of investment deals completed, while lettings of large units were up by a quarter.
Its latest market update shows that 39 investment deals with a total value of £505m completed during the six months – 26% lower than last year’s record first half, but still 24% above the five-year average.
Well over a fifth of all investment (£110m) was for speculative developments, with investors’ appetite for such schemes reaching a record high during the early months of the year.
Meanwhile lettings of ‘big box’ units – more than 90,000 sq ft – totalled 4.19 million sq ft, 25% higher than the same period last year.
With only two new-build speculative units immediately available, supply is still failing to keep up with demand, which is continuing to push up rents.
Smaller units also saw record rental growth, with rents on second-hand units edging closer to those of new-builds due to lack of supply. Land values have continued to increase, reaching more than £2m an acre in the most sought after locations.
Key investment deals in the first half included the sale of Artis Park, Winsford, to The Albert Gubay Charitable Foundation for more than £22m; Mileway’s £10m acquisition of Southside Bredbury; the £101m investment by Frasers Logistics & Commercial Trust to fund a new Peugeot distribution centre in Ellesmere Port; and the £19m acquisition of Rhodes Business Park in Middleton by Oxenwood.
Simon Wood, of B8 Real Estate’s investment team, said: “Despite the economic headwinds and the ongoing war in Ukraine, the industrial property market has continued to perform strongly, both in terms of trading volumes and pricing achieved. Whilst the market has noticeably softened in recent weeks, prices remain well above historical levels.
“A key trend is the growing importance of ESG issues, particularly from institutional investors, but also from occupiers. Building owners and developers need to give serious consideration to EPC levels, BREEAM and other initiatives, too, if they want to ensure premium pricing and strong demand in the future.”
Key occupational transactions during the period include that of an 878,000 sq ft unit at Warrington’s Omega site to Home Bargains; a 505,000 sq ft unit at Omega to Iceland Foods; and a 393,000 sq ft unit to NHS supply chain in Widnes.
Jon Thorne, of the lettings team, said: “While some occupiers have put their requirements on hold to assess the economic climate, we believe there is still good depth in occupational demand and expect take up to remain strong in the second half, with total take up in 2022 still well ahead of the five year average.
“Although viability issues may slow the delivery of speculative development, this means that supply will remain constrained which will help maintain continued rental growth.”
He added: “Despite the threat of an economic slowdown, we believe that the industrial sector will remain resilient as it is underpinned by structural changes – such as the growth of online retailing, increased storage of products in the UK to protect supply chains, and onshoring of manufacturing, which should ensure continued growth in activity in the months and years ahead.”
