Supply

Since the recent high point was reached in Q4 2017, supply has been decreasing and now stands at 3.28m sq ft, a fall of 33.99% in 12 months, reflecting a vacancy rate of just 3.8%.

Whilst the vacancy rate has fluctuated around the 4% market in the last four years, the make-up of the supply has altered dramatically. For example at the start of 2015 there was 2.7m sq ft of Grade B and Grade C supply on the market accounting for 67% of supply. On the other hand, at the start of 2019 this proportion had fallen to 43%.

The largest unit on the market remains Quantum at Magna Park at 411,613 sq ft, which has been vacant for 32 months having been under offer twice in the last 12 months.

Take-up

2018 has been a record year with 8.92m sq ft of space transacted, 101% above the long- term average, and more than double what was transacted in 2017.

Comparing transaction volumes with 2017, all building types experienced around twice as much activity in 2018, such as the amount of new Grade A space transacted increasing 166%. In fact, 2018 saw Grade A space account for 94% of the total space transacted with Grade B and Grade C space equating to just 6%.

Build-to-suit space dominated the market with the largest deal being c.1.3m sq ft at Segro Logistics Park East Midlands Gateway (Big Box 1). Segro Logistics Park East Midlands Gateway has been one of the most successful schemes in the region in 2018 securing four build-to-suit deals totalling over 2m sq ft of space.

Development pipeline

There are 12 units under construction which total 3.34m sq ft, primarily located in Northamptonshire where seven units are under construction. The largest unit is Nottingham 550, where Panattoni are developing 550,000 sq ft due to reach practical completion in Q1 2019.