Supply

The supply of warehouse space over 100,000 sq ft currently stands at 2.51m sq ft across 10 units, this is a 29% decrease in the past 12 months. According to the three-year annual average take-up, there is just 0.36 years’ worth of supply in the West Midlands.

Analysing the available supply by Grade shows 14% of space on the market is Grade A speculatively developed quality whilst 44% is second-hand Grade A stock, 10% is Grade B and 32% is Grade C space. The low-quality Grade C space is unsuitable for many occupiers and would benefit from comprehensive refurbishment to improve their ESG credentials, infrastructure and building design.

By unit count, 60% of the available supply is within the 100,000–200,000 sq ft size band, 10% is within the 200,000–300,000 sq ft size band, 10% the 300,000–400,000 sq ft size band, 10% the 400,000–500,000 sq ft size band and 10% over 500,000 sq ft. With the current supply and demand dynamics, we continue to expect that rental growth will exceed the 4.3% forecasts per annum by RealFor in the next five years.

Take-up

Take-up in 2022 has reached 4.57m sq ft across 18 transactions, this is the strongest H1 ever recorded and is 103% above the long-term H1 average. The average deal size YTD has been in line with the long-term average, reaching c. 250,000 sq ft. Transactional activity has centred around better quality space, 10% of space transacted YTD has been new speculatively developed space, 18% has been speculatively developed space let before practical completion, 51% was built-to-suit space, and 21% was second-hand space.

Deal counts highlighted the preference towards smaller size units throughout the region, there have been ten deals within the 100,000–200,000 sq ft size band, three within the 200,000–300,000 sq ft size band, three within the 300,000–400,000 sq ft, one within the 400,000–500,000 sq ft size band and one over 500,000 sq ft. The largest deal this quarter was Iron Mountain committing to a unit of 675,000 sq ft at Symmetry Park Rugby, in total, Iron Mountain took 1m sq ft at the site.

Third-party logistics firms have accounted for 35% of the total take-up YTD, this was followed by manufacturers accounting for 23% and the other sector accounting for 22%.

Development pipeline

There are ten units currently under construction within the West Midlands, totalling 2.22m sq ft. There are six units under construction within the 100,000–200,000 sq ft size band, one within the 200,000–300,000 sq ft size band, two within the 300,000–400,000 sq ft size band and a single unit within the 400,000–500,000 sq ft size band.

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