Supply

Continued speculative development and strong occupier demand has meant the region has remained broadly stable in terms of the supply and demand dynamics. More recently, we have seen a shift in the quality balance of the available stock as low-quality Grade C units return to the market. Currently, 59% of the available space on the market is Grade A, just 6% is Grade B and 35% is Grade C space.

Now, the region has 3.94m sq ft available across 25 units. The supply is pretty much equal between London and the South East, with 57% being marketed within the wider South East and 43% within London.

In terms of unit count, there are 21 units 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 within the 300,000–400,000 sq ft size band.

A large proportion of the Grade C space should be earmarked for redevelopment or refurbishment as they do not reach the ESG standards expected by many occupiers.

Take-up

The first half of 2022 saw 2.62m sq ft of space transacted, which is just 1% lower than the amount seen in 2021 and just 2% lower than the long-term H1 average. There has been a significant increase in the number of deals in recent years, with 2022 setting a new H1 record as 24 separate transactions have been recorded.

Following on from last year, the region has seen a shift away from larger units towards the smaller size bands. In 2022, 82% of transactions have been within the 100,000–200,000 sq ft size band compared to a long-term average of 66%. The 200,000–300,000 sq ft size band saw 12% of transactions, and the 300,000–400,000 sq ft size band saw 6%.

In terms of Grade, 45% of all space transacted in 2022 YTD has been Grade A speculatively developed space, 35% has been Grade A, 8% Grade B, and 12% has been classified as Grade C space.

Occupier demand has been diverse with a sustained demand coming from a diverse range of sectors, 3PLs have accounted for 43% of the activity, followed by the other sector at 39%, which includes the likes of Data Centres and Film Studios.

Development pipeline

There are now 22 units under construction across the region, totalling 3.57m sq ft, 85% of which are based in the South East and just 15% within London. There are, in total, 17 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 two within the 300,000–400,000 sq ft size band.

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