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Just 1.13 year's worth of supply left, given the five-year average take-up
X-Dock 549 provides 549,500 sq ft of Grade A space. Savills is marketing the unit on behalf of Marshall CDP
Savills has recorded an uptick in the available supply as second-hand space is returned to the market; however, many of these units are poor quality or in unsuitable locations for many occupiers. Despite the rise in supply, the vacancy rate remains low at 6.69%, far below the 9.6% in 2019. Savills vacancy rate model has analysed lease events, potential tenant failures and development pipeline, which suggests this may now have peaked and is expected to fall to 6.1% by Q2 2024
Jon Atherton, Director, Manchester
Supply
Supply The supply of warehouse space has increased 83% in the last 12 months to stand at 6.19m sq ft across 31 units.
In terms of grade, 46% is Grade A speculatively developed space, 14% is second-hand Grade A space, 16% is Grade B space, and 24% is Grade C space. Currently, 79% of the stock within the North West does not reach the EPC B or above standard increasingly requested by occupiers. Landlords should focus on making necessary refurbishments in order to maximise rents achieved.
By unit count, there are 21 units within the 100,000–200,000 sq ft size band, four within the 200,000–300,000 sq ft size band, four within the 300,000–400,000 sq ft size band, and two over 500,000 sq ft.
Savills logistics rental growth forecasts from 2024–2028 highlight the North West as having the largest rental growth of any UK region. Savills expects 6.3% per annum over the next five years in our baseline scenario and 4.8% in our pessimistic scenario.
Take-up
Take-up has reached 4.02m sq ft across 16 transactions which is 4% below the long-term average. The average deal size has reached 251,118 sq ft.
Analysing take-up in terms of specification shows 14% being pre-let speculatively developed space, 4% was speculatively built space, 46% was second-hand space, and 36% was built-to-suit space. Additionally, in terms of grade, 18% of space transacted was Grade A speculatively developed space, 39% Grade A, 14% Grade B, and 29% Grade C space.
By deal count, there have been nine transactions within the 100,000–200,000 sq ft size band, four within the 200,000–300,000 sq ft size band, one within the 400,000–500,000 sq ft size band and two over 500,000 sq ft. The other alternative sector has accounted for 28% of take-up in 2023, consisting of alternative occupier types, manufacturers accounted for 22% and 3PLs 19%. Furthermore, wholesalers accounted for 12% and high street retailers accounted for 11%; interestingly, online retailers continue to be active, accounting for 9% of all activity.
Development pipeline
There are currently eight units being speculatively developed throughout the region. There are five units under construction within the 100,000–200,000 sq ft size band, one within the 200,000–300,000 sq ft size band, one within the 400,000–500,000 sq ft size band and one over 500,000 sq ft. Savills is tracking multiple other schemes that have achieved planning, yet issues such as funding have caused them to be temporarily paused.