Supply

The supply of warehouse space has increased by 111% in the last 12 months to stand at 5.6m sq ft across 25 units. Using the three-year average annual take-up, this equates to just 0.84 years’ worth of supply in the region. The vacancy rate has increased to 6.17%, yet is still crucially below the peak of 9.6% in 2019.

In terms of grade, 39% is Grade A speculatively developed space, 7% is second-hand Grade A space, 28% is Grade B space, and 26% is Grade C space.

By unit count, 68% are within the 100,000–200,000 sq ft size band, 8% are within the 200,000–300,000 sq ft size band, 12% are within the 300,000–400,000 sq ft size band, and 12% are over 500,000 sq ft.

We expect prime rents to continue to grow due to the supply and demand dynamics remaining consistent for Grade A space. RealFor is suggesting 5.3% per annum for the next five years.

Take-up

Take-up has reached 2.15 across nine transactions which is 3% above the long-term H1 average. The average deal this H1 stood at 238,859 sq ft.

In 2023, occupier demand has leant towards better quality units, with 7% of take-up being pre-let speculatively developed space, 21% being existing speculatively developed space, 46% being built-to-suit space, and 26% second-hand space. Additionally, in terms of grade, 74% of space transacted was good-quality Grade A, 10% Grade B, and 16% low-quality Grade C space.

By deal count, in 2023, there has been four deals within the 100,000–200,000 sq ft size band, three within the 200,000–300,000 sq ft size band, one within the 300,000–400,000 sq ft size band, and one within the 400,000–500,000 sq ft size band.

Manufacturers have accounted for 43% of the total take-up in 2023, followed by high street retailers at 21%. The other sectors, which consist of the likes of data centres and film studios, have also been active, accounting for 14% of take-up.

Development pipeline

There are currently five units being speculatively developed, totalling c.925,000 sq ft. There are four units under construction within the 100,000–200,000 sq ft size band and one within the 300,000–400,000 sq ft size band. Savills is tracking multiple other schemes that have achieved planning, yet issues such as funding have caused them to be temporarily paused. Should these units come to the market without being pre-let, the vacancy rate would rise to just 7.2%.

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