Industrial – the last piece of the puzzle

Key to maintaining and growing the region’s strength is ensuring that accommodation for business relocation and expansion is available. With high occupier demand continuing to eat up the North West’s limited supply across sectors, significant pressure is still on the availability.

This year we’ve seen new development across the full range of asset classes in the North West pick up, however this should all be taken within the context of the long-term undersupply of the past five years.

The best example of a sector still seeing a lag in development is industrial, which is proving to be a real sticking point. We’re not far from a situation where the lack of stock will start to impede occupier movement and expansion.

Our most recent research shows that, on a national level, there was only 13.3 million sq ft of space available in Grade A warehouses larger than 100,000sq ft, the ‘Big Box’ market, at the end of September. This figure has also been in decline for the past six years.

To put this in context, in the first three quarters of the year 13.5 million sq ft of space of this calibre was taken up. Of this, 2.4 million sq ft of deals were seen in the North West alone, owing to the demand from the local market seeking to expand as well as new entrants seeking cost effective, high quality space in one of the UK’s most urbanised regions.

Until around a year ago, development in the North West industrial market hadn’t really made the necessary step change needed to make up the shortfall. For spaces larger than 100,000sq ft, those developing speculative warehouses had homed in on the West Midlands and along the M1 corridor.

However, the continued pressure on existing supply saw the region turn a corner at the end of 2014 with the announcement of Evander Properties beginning construction of its 185,000sq ft shed at Revolution Park in Chorley, firing the starting pistol for a new phase of speculative development.

With a steady flow of schemes coming to the fore since then, a sign of developers moving up the risk curve and a good indication of confidence in the market, there’s a wave of new stock on the horizon. While this is certainly good news, again it needs to be taken within the context of this market’s recent past. The long-term undersupply that’s faced industrial in the region means that there’s certainly room for even more growth.

While it’s clear developers are considering the market here, those choosing to dip their toe in the water sooner rather than later will reap the benefits of the region’s significant demand.