Research article

The logistics market in the West Midlands

West Midlands sees 53% rise in take-up


As forecasted by our requirements index, transactional activity in the West Midlands saw a significant rise in the second half of 2024, reaching 2.4 million sq ft. This pushed the total level of activity for the year to over 5.3 million sq ft, a 53% increase compared to 2023. Encouragingly, our requirements index has increased by a further 68% quarter on quarter, suggesting continued occupier activity throughout 2025. Interestingly, a large proportion of these requirements have come from international companies looking to establish either their manufacturing headquarters or logistics platforms in the West Midlands.

The level of supply has grown considerably in the last quarter, with 1.3 million sq ft of good quality second-hand grade A space returning to the market. As a result, the vacancy rate has risen to 7.45%.


Supply

The West Midlands has seen a 29% increase in the availability of units over 100,000 sq ft, with 35 units now available, totalling 7.44 million sq ft. Analysis of the current supply by grade shows that 34% of the available space is good quality new speculative development, 28% is second-hand grade A space, 17% is grade B space, and 21% is grade C space. It is important to note that Savills primarily uses physical characteristics to determine the grade of a unit. Recent requirements highlight the rising power demands from occupiers, particularly manufacturers and logistics hubs in the region. Many of the units on the market do not currently meet the power availability that many occupiers are now seeking.

In terms of unit count, there are currently 18 units available within the 100,000–200,000 sq ft size band, twelve in the 200,000–300,000 sq ft size band, three in the 300,000–400,000 sq ft size band, and two in the 400,000–500,000 sq ft size band.

Due to more positive supply and demand dynamics, Savills has revised its rental growth projections for the West Midlands compared to neighbouring regions. In our baseline scenario, Savills is forecasting rental growth of 3.2% per annum over the next five years, and 3.8% per annum in the optimistic scenario.

Take-up

Following the economic and political uncertainty that impacted the UK in 2023, occupiers in the West Midlands had paused activity, resulting in a decrease to 3.5 million sq ft of transaction activity for the year. However, 2024 saw a rebound, with transactional activity reaching 5.4 million sq ft across 24 transactions, representing a 53% increase compared to the previous year and a 13% increase above the long-term annual average. The average unit size transacted remained steady at 222,021 sq ft in 2024.

In terms of specification, 48% of space transacted in 2024 was second-hand, 32% was newly built speculative development, and 20% was built-to-suit (BTS) space. These figures are broadly in line with the long-term averages: 45% of space transacted annually is second-hand, 24% is new speculative development, and 31% is BTS space.

This year, the region saw 14 transactions within the 100,000–200,000 sq ft size band, three 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. According to the long-term annual average, there are 14 transactions annually 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, one within the 400,000–500,000 sq ft size band, and one over 500,000 sq ft.

Occupier activity has largely been driven by manufacturers in 2024, who accounted for over 44% of total transactional activity. Online retailers accounted for 20%, third-party logistics (3PL) firms for 16%, and wholesalers for 11%.

Development pipeline

The market has responded to the increase in supply in the West Midlands, with development announcements down 35% compared to this time last year. Currently, there is 1.89 million sq ft of space under construction across ten units. There are seven units under construction within the 100,000–200,000 sq ft size band, aligning closely with occupier demand. Additionally, one unit is under construction within the 200,000–300,000 sq ft size band, and two units are under construction within the 300,000–400,000 sq ft size band.