Supply

The record levels of take-up have caused the supply of units over 100,000 sq ft to decrease. Currently, there are 26 units available totalling 5.75m sq ft representing an 8% decrease from this time last year. The strong level of activity continues to keep the regional vacancy low at 5.16% which, under normal circumstances, would be expected to trigger rental growth. Using the five-year annual average take-up there is just 0.69 years worth of supply in the market.

The current supply is skewed towards the smaller sized units with 73%, by unit count, being within the 100,000–200,000 sq ft size band. There is a single unit available within the 200,000–300,000 sq ft and the 300,000–400,000 sq ft size band, two within the 400,000–500,000 sq ft size band, and three over 500,000 sq ft.

The recent addition of over 1m sq ft of Grade A speculatively developed space at Magna Park Lutterworth South has shifted the proportion of Grade A supply in the region. Now, 62% of the available supply is considered Grade A, 22% is Grade B and 16% Grade C.

Take-up

A record 12.03m sq ft of space was transacted in 2020 across 32 transactions with demand coming from a diverse range of occupiers. The most active sectors, however, were 3PLs who took 46% of the figure compared to the long-term average of 17%, this was followed by grocery retailers and online retailers which accounted for 13% and 12% of the total take-up respectively. The remaining 29% of take-up was from a range of sectors.

2020 has seen nine deals above 500,000 sq ft, 350% above the annual average of two deals per year. Furthermore, the rising occupier demand for larger units is shown in the average deal size which has increased by over 27% in the past 10 years to stand at c. 375,865 sq ft.

Build-to-suit transactions continue to dominate the market accounting for 44% of take-up followed by 25% being Grade A speculatively developed and 31% being second-hand quality.

Development pipeline

Developers have responded to the increased transactional activity and lack of supply. There are now eight units under construction which total 1.95m sq ft.

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