Supply

There are just eight units over 100,000 sq ft in the East Midlands totalling 2.03m sq ft which equates to a vacancy rate of just 1.69% or 0.19 years’ worth of supply. Savills is aware at least two of the eight units are currently under offer which is set to reduce the available supply even further. The largest unit on the market is Panattoni Park Northampton comprising 430,000 sq ft of Grade A speculatively developed space.

By unit count, 25% of the available supply is within the 100,000–200,000 sq ft size band, 38% is within the 200,000-300,000 sq ft size band, 25% within the 300,000–400,000 sq ft size band and 12% within the 400,000–500,000 sq ft size band.

Due to the strong occupier demand for units in the area, along with rising rents for Grade A stock; the majority of lower quality second-hand space has now been let. Pairing this with multiple speculative developments reaching practical completion, 100% of the available space is now Grade A. This is set to push rents higher and higher as each lease is setting market records.

Take-up

Take-up has reached 12.39m sq ft across 46 separate transactions, up 113% on the long-term average.

Occupier preference continues to revolve around better quality units. In 2021, 87% of space transacted has been Grade A, 11% has been Grade B, and 2% has been Grade C. In terms of specification, 33% of space has been second-hand space, 30% has been built-to-suit space, and 37% has been speculatively developed space.

In terms of deal count, 41% have been within the 100,000–200,000 sq ft size band, 30% within the 200,000–300,000 sq ft size band, 9% in the 300,000–400,000 sq ft size band and the 400,000–500,000 sq ft size band and 11% over 500,000 sq ft. Savills continued to see an uptick in requirements for larger units in 2021 which should mean the average size deal continues to increase from its current level of c.270,000 sq ft.

Transactional activity has stemmed from a diverse range of occupiers in 2021; 3PLs have accounted for 39% of take-up, online retailers accounted for 30%, with the remaining spread across a diverse range of occupiers.

Development pipeline

There are currently 19 units under construction, which total 4.43m sq ft. Pleasingly, 42% of these units are over 200,000 sq ft, which will continue to help cater for the larger requirements in the market, especially as the price per acre of Industrial & Logistics land continues to rise at exceptional rates within the region.

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