Supply

The level of supply within the region currently stands at 6.54m sq ft across 36 units, representing a 9% decrease from this time last year. Using the five-year average annual take-up there is just 0.54 years worth of Grade A supply in the region. Of the currently available stock, 36% is considered Grade A quality, 31% is Grade B and 33% Grade C. It is, however, worth questioning the suitability of Grade C stock for modern logistics operations considering that just 3% of take-up over the last two years has been for Grade C units.

When analysing the market by size, 72% are within the 100,000-200,000 sq ft size band (30% are Grade A), 19% between the 200,000–300,000 sq ft size band, 3% within the 300,000–400,000 sq ft size band, 6% 400,000–500,000 sq ft. The largest unit on the market is Acton Gate in Stafford totalling c. 475,000 sq ft of Grade B second-hand space.

Take-up

Take-up in H2 2020 outperformed expectations reaching 5.61m sq ft bringing the 2020 total to 6.61m sq ft, 65% above take-up in 2019. Demand came from a variety of sectors; however, online retailers and 3PLs accounted for the highest proportion of take-up at 29% each. This is positive news demonstrating the strength of demand in the market despite the lull in requirements from the historically prominent aerospace and automotive sectors.

This year, in terms of deal count, we have seen 69% fall within the 100,000–200,000 sq ft size range, 16% within the 200,000–300,000 sq ft range, 3% within the 300,000–400,000 sq ft, 6% between the 400,000–500,000 sq ft size band and 6% above 500,000 sq ft. The largest deal in 2020 was Pets at Home committing to a 670,000 sq ft built-to-suit unit at Redhill Business Park in Stafford, for a 20-year term.

Occupier preference continues to revolve around better quality units with 85% of space transacted in 2020 being classed as Grade A, 13% was classified as Grade B, and the remaining Grade C.

Development pipeline

Six units are currently under construction within the West Midlands totalling 808,924 sq ft. All of these units are within the 100,000–200,000 sq ft size band aligning with occupier demand. Although this will help relieve some supply constrains, we are seeing increased interest in larger units, as evidenced by larger deals done in Q4 2020 of 300,000 sq ft+.

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