Big sheds booming, but smaller units suffering stock shortage
Almost half of all big shed industrial-sector real estate activity in the first half of 2017 was centred in the Midlands – with the area’s automotive industry being the main contributor, according to a report by GVA.
More than 5m sq ft of space was taken across the wider region by big shed deals, which is property over 100,000 sq ft. Key deals in the first half of the year included 645,000 sq ft to XPO Logistics in Tamworth and 550,000 sq ft to Jaguar Land Rover at the Tyre Fort in Birmingham.
At the same time, Harris Lamb is warning about the “critically low” levels of industrial stock in the West Midlands after the largest business park in South Birmingham reached record low vacancy levels.
Kings Norton Business Centre, which extends to 900,000 sq ft, now has only four units remaining, all of which are under 3,000 sq ft.
Harris Lamb’s Neil Slade said: “This is just the latest centre within the region to be reaching capacity, if not becoming fully let.
“Within the last three months alone, Hartlebury Trading Estate in Worcestershire and Maybrook Business Park in Minworth have also reported record low voids, while Minworth Trade & Industrial Park, Kelvin Way Trading Estate in West Bromwich and Baker House Trading Estate in Lye have all reached full capacity.”
David Willmer, senior director in GVA’s industrial and distribution team in the Midlands, believes demand for big sheds “remains robust” but the industrial property sector is facing challenges with smaller units.
He said: “The availability of larger units is sufficient to cover current demand in a number of areas, however the Midlands continues to suffer somewhat from a lack of high quality sub-100,000 sq ft stock, for which there’s strong demand from the manufacturing, automotive component and last mile internet delivery sectors.
“While the level of speculative development has fallen slightly, it’s important to stress that this message should not be construed as downbeat. We’ve moved from a record-breaking level of speculative development which peaked in H1 2016 and there is still an active speculative development programme in place.”
He said demand for further development sites continues to be strong, from both developers and investors, driven by strong occupier demand with robust capital values and rental growth continuing to keep development viability healthy.
“However, we do expect the recent easing off in speculative development activity to continue into next year,” he added.
The national take-up of big sheds totalled 11m sq ft during the first half of 2017, just below the five-year average of 11.3m sq ft.
GVA’s Industrial Intelligence report highlighted how the retail sector was dominated by Amazon UK, which took 2.3m sq ft in five deals, including 434,000 sq ft at Lyons Park, Coventry.