Supply

Following on from the sharp uptick in the available supply at the start of 2023, supply levels have remained stable. There are currently 27 units available over 100,000 sq ft, which total 6.04m sq ft. There are no units over 450,000 sq ft available in 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.

The West Midlands continues to be dominated by smaller units, with 15 currently available within the 100,000–200,000 sq ft size band, six within the 200,000–300,000 sq ft size band, five within the 300,000–400,000 sq ft size band, and one within the 400,000–500,000 sq ft size band. Despite the rise in supply, the vacancy rate remains broadly in line with the long-term average of 5.98%. When using the five-year annual average take-up, this relates to 0.94 years’ worth of supply in the region.

Savills rental growth forecasts suggest that in our baseline scenario, the region is set to see 4.8% growth per annum over the next five years.

Take-up

Take-up in 2023 has reached 3.68m sq ft across 19 transactions – this is a 23% decline on the long-term average. The main reason for this decline was the lack of large units acquired during this period. In the last three years, we have seen an average of five transactions above 400,000 sq ft. In 2023, there has been a single transaction over 400,000 sq ft, which has caused the average deal size to fall to 167,221 sq ft.

Economic pressures have led occupiers to pivot away from the build-to-suit route to acquire space towards existing units. In 2023, 26% of space transacted was built-to-suit space, 15% was speculatively developed space, and 59% was second-hand space. In terms of grade, there is still occupier preference towards best-in-class buildings, with 15% being Grade A speculatively developed space, 56% Grade A, 24% Grade B and 5% Grade C space.

By unit count, there have been 13 transactions within the 100,000– 200,000 sq ft size band, three within the 200,000–300,000 sq ft size band, two within the 300,000–400,000 sq ft size band and one over 500,000 sq ft. Manufacturers have shown strong commitment to the region, accounting for 33% of all transactions. 3PLs have accounted for 25% of all transactions and grocery retailers 18%.

Development pipeline

There are 14 units under construction within the West Midlands, totalling 2.89m sq ft. Eight are within the 100,000–200,000 sq ft size band, three the 200,000–300,000 sq ft band, and three the 300,000–400,000 sq ft band.

< Publication Homepage