Record first half for big box space take up
The West Midlands helped achieve a record H1 for the Big Box market in 2018, with the Midlands as a whole accounting for over 50% of overall take-up of 12.3 million sq ft of Grade A logistics floorspace, according to latest research..
According to JLL, the East Midlands took the largest share of new floorspace in H1 at 45%, with the West Midlands reporting 15% of total demand. The Greater South East (South East, East and London) recorded a 16% share.
Carl Durrant, director industrial and logistics in JLL’s Birmingham office said: “Take up in the occupational market was exceptionally strong in the first six months of this year, indeed it was one of the strongest half yearly levels on record and 27% higher than the five-year half yearly average, H2 2013 – H1 2018 (9.7 million sq ft).
“The sharp rise is partly attributable to a number of large transactions, that had initially been expected to complete last year, rolling over into 2018. Of the 12.3 million sq ft taken up in H1 2018, around 9 million sq ft comprised new units, with the remaining 3.2 million sq ft consisting of good quality second hand space.”
Stand out deals in the Midlands included the 490,000 sq ft taken by Meggitt at Prospero, Coventry and XPO for Nestle’s 627,000 sq ft at East Midlands Gateway.
Logistics companies were the most active source of take-up, at 38% of the total whilst the growth of online retail has continued to generate new demand for warehousing with retailers accounting for 34% of demand.
Durrant added: “Despite the likelihood of slow economic growth this year and continued uncertainty over Brexit, we remain positive about the logistics market in 2018. With over 4 million sq ft of logistics space currently either under offer or expected to complete in the short-term we expect a robust level of take-up this year, potentially around the 20 million sq ft mark, which would be above the five-year annual average.
Headline rents look set to rise too. Nationally, JLL’s forecasting model predicts distribution rental growth of 2.4% pa over the five years 2018-2022 based on the MSCI national distribution segment, but certain prime locations should see stronger growth than this.
“In Wolverhampton we are seeing one of the largest spec buildings in the Midlands coming forward from First Panattoni, one of Europe’s biggest names in logistic schemes. Nearly 450,000 sq ft of space is being developed for completion in Q4 of 2018.
“It’s the same picture nationally, with a change in the take-up of new space and speculative product eating into the dominant built to suit (BTS) share. Based on our monitoring of the supply pipeline, we expect speculative development to continue to rise, including larger units.”
