Supply

The quality balance of the supply has shifted as speculatively developed units have come to the market. Grade A stock now makes up 69% of all space on the market totalling 3.83m sq ft across 17 units, a 108% increase on the amount of Grade A space available in 2017.

Increased speculative development paired with large second-hand units returning to the market such as Tectonic 620 comprising 617,393 sq ft has caused supply to rise. Current supply totals 5.54m sq ft, representing a 42% rise from 2017, 71% of this supply is under 200,000 sq ft, which correlates with long-term take-up trends with 64% of deals being in the same size band. Unit sizes increase as you move north with the largest units, Tectonic 620 and Altitude both being in Milton Keynes.

Take-up

Take-up levels increased 33% in 2018 reaching 6.35m sq ft through 20 separate deals, the highest amount of activity since 2014. The average deal size has risen by 66.4% from 2017 reaching a record high of 312,379 sq ft for the region, a 40% increase above the long-term yearly average.

Build-to-suit transactions accounted for 45% of deals within the region, totalling 4.58m sq ft. The largest deal in the region was Lidl acquiring land and self-building 1.1m sq ft in Dunstable.

We are expecting a strong start to 2019 with 1.5m sq ft of warehouse space already under offer.

Development pipeline

There are eight units under construction totalling 1.52m sq ft, but there are no units under construction inside the M25, and just two in the Home Counties. The largest unit due for delivery in 2019 is Bedford 405 where Goodman are speculatively developing 405,000 sq ft, set to reach practical completion in Q3 2019.