Supply

There are 41 units available over 100,000 sq ft in the East Midlands, totalling 8.98m sq ft – this is a rise of nearly 418% from the record lows we saw last year. Despite it being one of the quickest upticks in vacancy to 6.99%, it should be noted this is now in line with the long-term UK average. Since 1980, as long as the vacancy rate has remained below 12%, there has been rental growth in the region.

Of the current supply, 16% is under offer and is set to complete next quarter. This will cause the vacancy rate to fall back sub 6%. Furthermore, despite the increase in supply, when using the long-term annual average take-up, there is still just 0.83 years’ worth of supply in the region.

Due to refurbishments and speculative development completions, 65% is considered Grade A, 32% Grade B, and just 3% is Grade C. Savills predicts occupiers will shift from built-to-suit units towards existing units due to issues regarding funding but also the greater availability of stock.

In terms of size bands, there are 26 units within the 100,000–200,000 sq ft size band, seven within the 200,000–300,000 sq ft size band, four within the 300,000–400,000 sq ft size band, one within the 400,000–500,000 sq ft size band, and three over 500,000 sq ft.

Take-up

Take-up in H1 2023 has reached 2.5m sq ft across nine transactions, which is in line with the long-term H1 average. The average unit size is still larger than neighbouring regions, totalling 277,454 sq ft in 2023, further demonstrating evidence of occupier demand towards larger units.

Analysing transactional activity by specification shows a continued trend towards better quality units: 55% of space transacted has been built-to-suit space, 25% has been speculatively developed space, of which, half was let prior to practical completion, and 20% was Grade A second-hand space. All space transacted in 2023 has been of Grade A quality.

By unit count, 45% of transactions were within the 100,000–200,000 sq ft size band, 45% were within the 300,000–400,000 sq ft size band, and 10% in the 400,000–500,000 sq ft size band.

Manufacturers have been the most active in 2023, accounting for 34% of all space transacted, 3PLs accounted for 26%, and high street retailers 16%. The remainder was spread over a range of retailer-related occupiers.

Development pipeline

There are currently ten units under construction, totalling 3.71m sq ft. There are three under construction in the 100,000–200,000 sq ft size band, four in the 300,000–400,000 sq ft size band, and three over 500,000 sq ft.

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