North West industrial market remains strong
THE North West is one of only a handful of markets where take-up of industrial space remained strong in 2011, according to a new report by GVA.
The firm bucked a nationwide trend which saw take-up of industrial space decline by 26% last year, but a lack of available big sheds of more than 250,000 sq ft is forcing potential investors in the region to consider setting up operations in the Midlands or Yorkshire instead.
The firm’s latest Industrial Intelligence report states that the North West, South East and East of England were responsible for 80% of all take-up of sheds with more than 100,000 sq ft of space. Five of the 12 top biggest deals were also completed in the North West through lettings to Asda at Kingsway Business Park (620,000 sq ft), Regatta at Ellesmere Port (393,000 sq ft), to DHL at G Park in Liverpool (360,000 sq ft), Expert Logistics in Crewe (360,000 sq ft) and to John Lewis Partnership at Matrix Park in Chorley (360,000 sq ft).
The firm said that more than 1m of built-to-suit work was undertaken last year.
“There is also the potential for further commitment from Amazon at Widnes for circa 1,000,000 sq ft of accommodation,” said Robert Dunston, a senior director at GVA’s Manchester office.
He argued that the North West will soon face a shortage of big shed stock, particularly for units of more than 250,000 sq ft where supply is “extremely limited”.
“This has now started to move through to the fact that a number of occupiers are having to consider design and build or alternative locations over the Pennines or farther south in the Midlands.
“Occupiers will therefore have to look to a number of development sites and be prepared to commit to longer-term lease solutions to have their property option satisfied.”
Despite this, the fall in supply has yet to push up headline rents and incentives have remained unchanged.
“These are likely to remain at current levels in the short term before a tipping point is reached and rents start to increase,” he added.
“In the meantime, rental growth will be limited to the few prime locations based predominantly on the design and build transactions all reflecting a shortage of supply.”
The local market for smaller deals involving SMEs remains quiet, however, with the drive for more space being principally driven by food and discount retailers, as well as internet businesses.
