Supply

The level of supply within the region currently stands at 8.64m sq ft through 44 separate units, a 20% increase from the start of 2020. This is due to a number of second hand units coming back to the market along with the recent completion of speculatively developed units. Of the current available stock, 64% is considered Grade A quality with 36% Grade B or C. However, closer analysis highlights that a large proportion of this stock is in need of refurbishment and is currently not capable of accommodating modern occupier requirements.

Of the units on the market, 41% have been constructed speculatively, and 66% are within the 100,000–200,000 sq ft size band. There are just four units above 400,000 sq ft with the largest being Goliath in Coventry at 666,044 sq ft.

Take-up

Take-up in H1 2020 reached 900,315 sq ft through six separate transactions representing a 59% decrease below the longterm H1 average and 40% below H1 2019. There has been a slight decline in larger requirements, unsurprising given the high level of uncertainty within the market, particularly around the automotive and aerospace sectors. The smaller size bands still attract occupier interest, 83% of transactions in H1 2020 by deal count being within the 100,000–200,000 sq ft size band. There have been no deals above 250,000 sq ft in H1 2020, however, we anticipate this will change in H2 2020. Occupier preference continues to revolve around better quality units with 76% of space transacted in H1 2020 being classed as Grade A.

The majority of demand in H1 2020 has come from online retailers, accounting for 45% of take-up whilst 3PL’s totalled 27% and high street retailers 16%. This is positive news and demonstrates the diverse range of occupiers active within the region.

Development pipeline

Two units are currently under construction within the West Midlands totalling 235,951 sq ft. Both of which are within the 100,000–200,000 sq ft size band, aligning with occupier demand.

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