Supply

The level of supply currently stands at 7.46 m sq ft, the highest level ever recorded, representing a 76% increase from 2017. Of this, however, 46% of the supply is considered to be Grade B and Grade C, accounting for close to 3.5m sq ft.

Recent strong demand has stimulated speculative development and since 2016 over 1.8 m sq ft of Grade A space has come to the market through units such as Wolverhampton 450 where Panattoni delivered 448,089 sq ft.

Supply has also been skewed by multiple large second-hand units, further increasing supply such as the UK’s current largest available unit Goliath at Cross Point Business Park in Coventry at 666,044 sq ft.

Take-up

After two strong years, take-up has tailed off in 2018, reaching 3.41 m sq ft through 18 transactions, representing a 44% decrease from take-up in 2017.

Second-hand units accounted for 44% of the total space leased in the region, whilst build-to-suit units accounted for 38% of the total space leased.

Take-up was skewed towards smaller-sized units with 67% of the deal count involving units between 100,000-200,000 sq ft.

Sectors previously inactive, particularly wholesale retail which accounted for 28% of the total space leased (up from 3% in 2017), took more space then historically active industries such as automotive and manufacturing.

Development pipeline

Five units are currently under construction totalling 837,584 sq ft. The largest unit currently under construction is 233,025 sq ft at Prologis Park Birmingham Interchange, the others are all sub 200,000 sq ft.