Supply

Given the current global situation, the market dynamics in the North West are incredibly positive. The supply of warehouse space has decreased by over 29% during the last 12 months to currently stand at 4.07m sq ft across 20 units. Using the five-year average annual take-up of 4.27m sq ft, this equates to just 0.98 years worth of supply in the region.

Occupier preference towards Grade A stock has shifted the quality balance of the supply, now just 33% of the available stock is Grade A whilst 56% is Grade B and 11% Grade C.

In terms of unit count, the supply is heavily skewed towards the smaller size bands, 65% are within the 100,000–200,000 sq ft size band, 15% within the 200,000–300,000 sq ft band, 10% within the 300,000–400,000 sq ft and 10% within the 400,000–500,000 sq ft. There are no units above 500,000 sq ft on the market in the region.

Take-up

Take-up in 2020 reached 5.16m sq ft across 25 transactions making it the best year on record. This is 52% above 2019 and 38% above the long-term average.

Adhering to recent trends, demand has centred around new speculatively developed space which accounted for 50% of take-up. Built-to-suit space accounted for 20% of take-up, and second-hand space accounted for 30%. Occupier preference continues to revolve around better quality units with 71% of space transacted being of Grade A quality. As the supply of Grade A space diminishes, we envisage a decline in incentives offered along with sustained rental growth.

In terms of deal count, 72% of transactions involved units within the 100,000–200,000 sq ft size band, 8% in the 200,000-300,000 sq ft size band and 300,000– 400,000 sq ft size band, 4% in the 400,000–500,000 sq ft size band and 8% above 500,000 sq ft.

Development pipeline

There are currently six units being developed totalling 1.26m sq ft. Two are within the 100,000–200,000 sq ft size band and four within the 200,000–300,000 sq ft band.

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