Automotive sector still driving demand for Midlands’ commercial property
The West Midlands has the highest level of take up of commercial units let during construction than any other UK region, according to new research.
Savills latest Big Shed Briefing, which highlights the weight of occupier demand, reports that 14% of 2016 deals, equating to 744,000 sq ft (69,118 sq m), were for properties still under construction, the largest of which was Jaguar Land Rover’s 327,000 sq ft (30,378 sq m) acquisition at Prologis Park Ryton.
Additionally, Savills said the West Midlands had a more diverse occupier base than other UK regions, mainly due to the automotive sector driving growth through the supply chain.
Manufacturing and the automotive sector accounted for 35% of the region’s industrial take up last year (equating to 1.9 million sq ft / 176,510 sq m), while online retail accounted for just 11% (573,000 sq ft / 53,232 sq m), bucking the national trend.
For 2016 as a whole, the West Midlands saw 5.5 million sq ft (510,950 sq m) of industrial space transact across 28 deals, just shy of 2014’s record 29 deals.
The largest deal of the year was Screwfix’s commitment to a 562,000 sq ft (52,210 sq m) build-to-suit unit at Prologis Park Fradley, though Savills noted that the average deal size was actually the lowest since 2013 at 197,000 sq ft (18,301 sq m).
When assessing availability, Savills found this figure had fallen by a quarter in the last 12 months and now stands at 3 million sq ft (278,700 sq m) across 20 units in the West Midlands.
While there are a number of buildings available sub-200,000 sq ft (18,580 sq m), occupiers have very little choice beyond that size.
Ranjit Gill, industrial director at Savills Birmingham, said: “The West Midlands is unique in that we have a much more diverse industrial occupier base than anywhere else in the UK and have not become dominated by online retailers.
“The sheer weight of demand is causing a rise in pre-lets and this looks set to continue in 2017. Thankfully, we have another 1.3 million sq ft of speculative space due to be delivered this year, which will help to satisfy at least some of the pent up demand.”
