Supply

The level of supply in the market has fallen by 36% in the last year. Currently, there is 850,000 sq ft available across four units. According to the three-year annual average take-up, there is just 0.35 years’ worth of supply in the region.

In terms of Grade, the vacant stock consists entirely of second-hand low-quality stock with 85% considered Grade C and 15% Grade B. Whilst by unit count, there are currently two units available within the 100,000–200,000 sq ft size band, one within the 200,000–300,000 sq ft size band, and one within the 300,000–400,000 sq ft size band.

The vacancy rate remains very constrained at 2.98% – this continues to push on rental growth with net-effective rents increasing through a reduction of incentives offered. Consequently, we expect the modest rental growth forecast of 5.2% per annum over the next five years to be eclipsed, particularly due to the surge of overseas requirements we are now experiencing.

Take-up

Take-up in 2022 has reached 2.91m sq ft across seven separate transactions, this is 223% above H1 2021 and 409% above the long-term annual average. The large proportion of consented and deliverable sites is proving fruitful for occupiers seeking bespoke builds. This availability, paired with the lack of good quality existing units has led 2022 take-up to be heavily dominated by build-to-suit transactions. So far, 82% of space transacted has been built-to-suit space, 14% has been speculatively developed space, and 4% has been second-hand space. In terms of deal count, transactions have been spread across the size bands, with 43% being within the 100,000-200,000 sq ft size band, 14% in the 200,000–300,000 sq ft size band, 14% in the 300,000–400,000 sq ft size band, and 29% over 500,000 sq ft.

The announcement of Freeport East's status within the region has driven inquiries from a diverse range of occupiers along the Eastern stretch of the A14 as occupiers look to capitalise on the vast range of benefits offered in locating within designated sites. In 2022, the largest transaction was at Gateway 14, a designated Custom & Tax Site as part of Freeport East, where an occupier has committed to a 1.2m sq ft unit. In total, high street retailers have accounted for 41% of space transacted in 2022, followed by manufacturers at 21% and 3PLs at 14%.

Development pipeline

Currently, the region has five units under construction, speculatively totalling 1.1m sq ft. There are two units within the 100,000–200,000 sq ft size band and three within the 200,000–300,000 sq ft size band.

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