Supply

The supply of warehouse space has fallen by 37% in the last year to stand at 2.56m sq ft across 12 units. Using the three-year average annual take-up of 4.88m sq ft, this equates to just 0.52 years’ worth of supply in the region.

Grade A stock now accounts for 44% of all available space, 24% is Grade B, and 32% is Grade C. In terms of unit count, the supply is skewed towards the smaller size bands: 57% are within the 100,000–200,000 sq ft band, 29% are in the 200,000–300,000 sq ft size band, 7% in the 300,000–400,000 sq ft size band, and 7% in the 400,000–500,000 sq ft size band.

Given that vacancy has hit record lows of 3.09%, construction materials continue to be in short supply, and occupier demand remains at record levels – there is a clear case to suggest that the actual rental growth will far exceed the forecast of 3.5% per annum over the next five years.

Take-up

Take-up in 2021 has been the best on record reaching 7.44m sq ft across 32 transactions. This is 13 transactions above the average of 19 per annum, and in terms of sq ft, 86% above the long-term annual average of 3.99m sq ft.

In 2021, 75% of space transacted had been Grade A, 22% had been Grade B, and 3% had been Grade C. As Covid-19 continues to delay construction, a large proportion of space transacted this year has been second hand (41%) as occupiers seek to satisfy immediate or short-term requirements. Although, there have been multiple large build-to-suit deals, in particular, over 500,000 sq ft, which have demonstrated the continued strength of the market, accounting for 36% of the total take-up this year. Speculatively developed space accounted for 27% of the total take-up.

In terms of deal count, 54% were within the 100,000–200,000 sq ft size band, 31% were within the 200,000–300,000 sq ft size band, 6% within the 300,000–400,000 sq ft size band, and 9% over 500,000 sq ft.

Online retailers have acquired the most amount of space in 2021, accounting for 34% of the total space transacted. Manufacturers accounted for 25%, and 3PLs accounted for 23%. The remaining space was spread over a diverse range of occupiers. The largest deal this year was Home Bargains taking 830,000 sq ft unit at Omega West near St Helens.

Development pipeline

There are currently eleven units being developed, totalling 2.73m sq ft. Six are in the 100,000–200,000 sq ft size band, two are within the 200,000–300,000 sq ft size band, two are within the 300,000–400,000 sq ft size band, and there is a single unit under construction over 500,000 sq ft.

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