Robust demand sees West Midlands eclipse East in big shed stakes

The long term average for industrial take up in the West Midlands has eclipsed the East Midlands for the first time, according to new research.

Strong occupier demand in 2017 saw total take up reach 5.86 million sq ft in the West Midlands and 4.24 million sq ft in the East Midlands, according to the latest Savills Big Shed Briefing.

The take up brings the long term averages to 4.22 million sq ft and 4.02 million sq ft respectively.

Savills said the particularly robust take up in the West Midlands could largely be attributed to an increase in build to suit deals last year, bucking the national trend of decline.

Major transactions such as Meggit’s 440,000 sq ft acquisition in Coventry (subject to planning) and Kimal’s 140,000 sq ft acquisition in Worcester created a year in which 45% of all industrial deals were build to suit, compared to the region’s long term average of 32% and a national long term average of 31%.

Though full year industrial take up in the East Midlands was significantly down year-on-year, Savills said this was inevitable after the record 7.03 million sq ft of 2016.

Like the West Midlands, the region contrasted with the national trend of decreasing build to suit deals by showing a rise in their proportion of overall take up to 68% from 64% in 2016. This was boosted by Decathlon taking 260,000 sq ft and Stanley Black & Decker taking 256,000 sq ft in build to suit deals, both in Northampton.

Regarding supply, Savills said the East Midlands had the most diverse offer of any UK region in terms of quality and is unique in that 72% of all supply is over 200,000 sq ft.

A raft of speculative completions saw supply reach a peak for recent times of 5.05 million in Q4 2017 and Grade A supply triple to 3.53 million sq ft from just 0.79 million sq ft in Q1 2016.

This mirrored the West Midlands, where developers responded to high demand by creating a robust current supply of 4.15 million sq ft across 26 units, up from a critical low 2.21 million sq ft in Q3 2016.

Ranjit Gill, industrial director at Savills Birmingham, said: “Industrial supply in the Midlands appears robust, but particularly in the West Midlands there is an imbalance in terms of size range and more units above 200,000 sq ft are certainly needed.

“Build to suit demand levels remain strong across the board and throughout 2018 we expect prime Grade A sites such as SLPEMG (East Midlands Gateway) and DIRFT III to absorb an increasing amount of the larger strategic national requirements.”