Supply

The level of supply within the region currently stands at 5.84m sq ft across 27 units, representing a 123% increase from this time last year. Despite this rise, it should be noted that the vacancy rate is in line with the long-term average, and when using the three-year average annual take-up, there is still just 0.72 years’ worth of supply within the region. Of the available stock, 25% is Grade A speculatively developed space, 45% is Grade A second-hand space, 20% is Grade B space, and 10% is Grade C space.

Analysing the vacant stock by size shows there are 17 units available within the 100,000–200,000 sq ft size band, two within the 200,000–300,000 sq ft size band, six within the 300,000–400,000 sq ft size band, and two in the 400,000–500,000 sq ft size band.

Currently, 20% of the available supply is under offer and is set to exchange in Q3 2023 – this will bring the vacancy rate down to 4.86%. According to forecasts from RealFor, the region is set to see rental growth of 5.3% per annum for the next five years.

Take-up

Take-up in 2023 has reached 1.62m sq ft across eight transactions, which is 25% below the long-term average. The average deal size this year was 202,727 sq ft.

Occupiers in the region have undoubtedly faced pressures given rising interest rates, inflation and other macroeconomic factors and have gone down the existing unit route to acquire space. In 2023, 66% of space transacted has been second-hand space, 17% has been built-to-suit space, and 17% has been newly built, speculatively developed space. The vast majority, when analysing the take-up trends by grade, still is good quality space, with 81% of take-up being Grade A quality, 9% Grade B, and 10% low-quality Grade C space.

Deal counts demonstrated the preference towards smaller units as 88% of deals were recorded within the 100,000–200,000 sq ft size band and 12% in the 500,000 sq ft+ size band.

Grocery retailers have dominated activity in 2023, accounting for 41% of the total take-up (Sainsbury's acquiring Rugby 661), followed by wholesalers at 30% and 3PLs at 23%.

Development pipeline

There are 13 units currently under construction within the West Midlands, totalling 2.74m sq ft. There are seven within the 100,000–200,000 sq ft size band, four 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.}