Vacancy rate at 7.05%; 28% of supply is within one large unit
Jaynic’s Suffolk Park scheme, where Greene King has recently acquired land to self-build a bespoke facility. Savills is the agent.
Requirements within the East of England have surged in Q2 2024, particularly interesting given recent large-scale investments in the area. Consequently, all the top-tier vacant spaces are now under offer and are expected to be finalised in Q3 2024. Given the region’s limited stock, the vacancy rate can vary rapidly, and we anticipate it will drop to 5.3% by the end of the year
William Rose, Director, Peterborough
Supply
The level of supply in the market has increased by 18% over the past twelve months, reaching 2.61m sq ft across nine units. According to Savills’ analysis, the peak of supply has been surpassed, and the vacancy rate is expected to fall to approximately 5.3% by the end of the year. Based on the five-year average annual take-up, there is only 1.13 years’ worth of supply available in the region. The largest unit currently on the market is Peterborough 736, offering around 736,000 sq ft of Grade B second-hand space, which alone constitutes 28% of the total available supply. Analysing the vacant supply in terms of grade shows 21% of space available is Grade A speculatively developed space; however, all is currently under offer, 7% is second-hand Grade A space, 38% is Grade B, and 34% Grade C space.
By unit count, there are currently two units available within the 100,000–200,000 sq ft size band, four within the 200,000–300,000 sq ft size band, two within the 300,000–400,000 sq ft size band, and one unit over 500,000 sq ft.
Take-up
Economic and political uncertainty affected occupier expansion plans during 2023, resulting in a take-up of 622,841 sq ft across four transactions. This trend has persisted into 2024, with take-up currently standing at 371,511 sq ft across two transactions. However, requirements have started to increase, with approximately 1.2m sq ft now under offer and set to exchange in H2 2024. Despite a dip in activity in the Big Box market, the mid-box size range has continued to outperform expectations, highlighting sustained occupier demand.
Savills continues to observe a lack of high-quality space and minimal speculative development pipeline, which is hindering broader market activity. All transactions in 2024 have involved BTS spaces, with no new developments and all available speculatively developed space under offer, this trend is likely to continue. Historically, the five-year annual average shows that 18% of space transacted per annum is new speculatively developed space, with a significant increase in years when such units are available, 53% is BTS space, and 29% is second-hand space.
Occupier demand has stemmed from third-party logistics firms, accounting for 66% of all activity and food producers who have accounted for 34% of activity.
Development pipeline
There is now no development pipeline. Occupiers seeking space within the region must either go down the BTS route to acquire space or acquire one of the nine existing units.