Supply

Over the last 12 months, supply has increased by 4.5% and now stands at 5.78m sq ft, compromising 30 separate units. Of the space on the market, 74% is now classified as Grade A, up from just 43% in 2015.

Take-up

Take-up totalled 7.88m sq ft for 2019, a 9% increase on 2018 and a 56% increase above the long term average for the region and a rise of 660,000 sq ft on 2018 setting a new record in the process. In February Amazon took the 574,000 sq ft Altitude unit from Gazeley, which is the largest deal for a speculatively constructed unit in 2019. The largest deal, however, was in Didcot where a data centre provider purchased land to construct a 700,000 sq ft data centre. Within the M25 SEGRO signed the largest leasehold BTS since 2011 as Ocado signed for a new 304,355 sq ft fulfilment centre in Purfleet.

However, deal volumes in 2019 have centred around the smaller size bands 48% of all deals being for units under 200,000 sq ft. This has meant the average deal size in the region has fallen by 30% to 202,169 sq ft.

There is continued occupier demand for Grade A space in the region as 45% of take-up has been for BTS units. Good news for developers, however, is that 1.78m sq ft of speculative space was taken in 2019, the highest amount since 2011.

Development pipeline

There are eight units under construction totalling 1.35m sq ft. The largest unit due for delivery in 2020 is Magnitude in Milton Keynes where Gazeley are speculatively developing 312,700 sq ft, set to achieve practical completion in Q3 2020.

Of the eight units, three are within the M25 with the larger buildings being spread across the wider South East region, meaning that we do not currently see any micro market oversupply driven by speculative development.

_{Read the articles within Big Shed Briefing below.}