Supply

Supply of units over 100,000 sq ft is now at the lowest level ever recorded in the region. Currently, there is 1.74m sq ft available across 13 separate units. This has pushed the vacancy rate lower to 1.97%, leaving just 0.19 years’ worth of supply in the market according to the three-year annual average take-up. Consequently, we have seen a 20% rise in average quoting rents.

Now, just 14% of the available supply is classified as Grade A. The region is in desperate need of new supply to relieve this chronic shortage. 53% of the supply is Grade B, with 33% Grade C. As with a large proportion of Grade B and C stock, they could often be considered obsolete through not being capable of accommodating modern occupier requirements.

Occupier demand for larger units is rising within the region; however, all of the available supply is within the 100,000–200,000 sq ft size band. Consequently, occupiers have to either commit to built-to-suit units or look towards neighbouring regions to satisfy their needs.

Take-up

Take-up in 2021 has been the strongest ever recorded, reaching 11.08m sq ft across 31 separate transactions. Yorkshire & the Humber saw 76% of this activity and the North East 24%. In perspective, this level of take-up is 109% above the long-term average annual figure.

Of the space transacted, 56% was build-to-suit, 24% was speculatively developed space, and 20% was second-hand. In terms of Grade, 82% of take-up was Grade A, 14% Grade B, and 4% Grade C. Activity was spread over the size bands – by deal count, 48% of transactions were within the 100,000–200,000 sq ft size band, 16% were within the 200,000–300,000 sq ft size band, 14% were within the 300,000–400,000 sq ft size band, 3% the 400,000–500,000 sq ft size band, and 19% the 500,000 sq ft+ size band.

The majority of activity in 2021 has stemmed from online retailers, who have accounted for 47% of all take-up, and 3PLs, who accounted for 30%. Positively, we have seen a rise in take-up from manufacturers, which have accounted for 15% of take-up this year. It’s important to note, Amazon has accounted for 43% of the total take-up this year through multiple large transactions.

Development pipeline

There are currently ten units under construction, totalling 2.22m sq ft. There are six units under construction within the 100,000–200,000 sq ft size band, three within the 200,000–300,000 sq ft size band and a single unit over 500,000 sq ft. There are another c.14 units that we are tracking in various stages of the planning process and should be announced to start on site imminently.

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