Vacancy rate is now 1.40%; just 0.16 years of supply
Brackmills Gateway, where Newlands & M&G are delivering 820,000 sq ft across three units
Take-up in 2022 has reached 4.95m sq ft which has caused the supply to remain at chronically low levels, standing at just 1.73m sq ft. This means that there is just 0.16 years' worth of supply in the region
Charles Spicer, Director, Birmingham
Supply
There are now just eight units over 100,000 sq ft in the East Midlands, totalling 1.73m sq ft, which equates to a vacancy rate of just 1.40%. The largest unit on the market is Unit 2 Mountpark Bardon comprising c. 360,000 sq ft of Grade A second-hand space. In terms of unit count, there are four units available within the 100,000–200,000 sq ft size band, two units within the 200,000–300,000 sq ft size band and two within the 300,000–400,000 sq ft size band. There are no units above 360,000 sq ft which, given the rising occupier demand for larger units in the region, is leading to an increase in built-to-suit deals. However, due to increasing construction costs and the lead times, requirements are being satisfied in neighbouring regions through existing stock.
The strong occupier demand for units in the area, along with rising rents for top-quality stock has led to all of the lower-quality space being either let or withdrawn for comprehensive refurbishment. All of the available space is considered Grade A, this increased competition will further push net-effective rents higher through a reduction in incentives offered.
Take-up
Take-up has reached 4.95m sq ft across 12 transactions, this is 96% up on the long-term H1 average. Interestingly, the average transaction size has increased substantially in the last year to c. 412,000 sq ft which highlights this shifting occupier demand towards larger units.
Occupier preference continues to revolve around better quality units. In 2022, 49% of space transacted has been speculatively developed space, of which 28% was let before practical completion, 48% was built-to-suit space, and just 3% was second-hand space. Despite the lack of stock and rising rents, the region’s infrastructure and location has cemented itself as the preferred location for many occupiers seeking Industrial & Logistics real estate in the UK.
By deal count, 17% of transactions have been within the 100,000–200,000 sq ft size band, 17% have been within the 200,000–300,000 sq ft size band, 17% the 300,000–400,000 sq ft size band, 17% the 400,000–500,000 sq ft size band and 32% over 500,000 sq ft. Following UK-wide trends, 3PLs have been the most active in the region accounting for 36% of the total take-up, this was followed by manufacturers accounting for 26% and the other sector at 16%.
Development pipeline
There are currently 27 units under construction, which total 5.06m sq ft. There are 20 within the 100,000–200,000 sq ft size band, four within the 200,000–300,000 sq ft size band, and three within the 300,000–400,000 sq ft size band. Savills is tracking these units closely as many are already under offer or have strong interest, however, should these add to the supply figures, the vacancy rate would rise to just 5.45%.
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