Research article

The logistics market in the East of England

Supply is skewed due to one large unit; it’s now under offer


Delta Park , Peterborough, where Trebor is speculatively developing two units totalling 538,000 sq ft

We have recorded a significant uptick in occupier requirements in the last year, highlighting the prominence of locating in the East of England due to our ports and proximity to London and the rest of the UK

William Rose, Director, Peterborough

Supply

The level of supply in the region has increased by 14% over the last year. Currently, there is 1.45m sq ft available within the region through four units. The largest unit on the market is 736 Kingston Park in Peterborough comprising 736,000 sq ft of Grade A space – it’s currently under offer, set to exchange in Q3 2021. Following the exchange, there will be just three units available, providing 709,380 sq ft of Grade C second-hand space. Further analysis demonstrates all of the Grade C available space is in need of refurbishment and is arguably more suitable for demolition in order to accommodate modern occupiers.

Aside from the aforementioned 736 Kingston Park, the remaining vacant units are all below 350,000 sq ft.

The vacancy rate remains constrained at 5.73%, which continues to push on rental growth. As 736 Kingston Park exchanges, the vacancy rate will drop to 2.81% demonstrating the volatility of supply in the region.

Take-up

Take-up in H1 2021 has reached 901,000 sq ft through three separate transactions, whilst a slight decline on 2020 – this remains 117% above the long-term H1 average.

New speculatively developed space accounted for the largest proportion of take-up, reaching 68% – the remaining 32% was built-to-suit space. No second-hand space has been taken in the region, highlighting occupier preference towards better quality units. The two recent speculatively developed units at Peterborough Gateway were let in Q1 2021, shortly after completion, to MH Star and Oatly. The short void period highlights the continued occupier demand within the region.

As the supply consists of low-quality second-hand space, we are seeing occupiers increasingly go down the build-to-suit route to obtain large modern units. The shortage of new space will continue to bring reduced incentives and positive rental growth.

Development pipeline

There are currently two units under construction at Delta Park in Peterborough of 307,500 sq ft and 230,940 sq ft. After they reach PC, there will be no other units under construction in the region. Without any pipeline development, occupiers will need to look to sites such as Gateway 14, Suffolk Park, Flagship Business Park or Peterborough South in order to satisfy requirements for good quality space.

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