Continued absence of larger sheds, particularly above 500,000 sq ft
Although H1 2025 take-up totalled only 1.4 million sq ft, which is down from the same period last year, there are encouraging signs with several units under offer and significant discussions with occupiers taking place on a BTS basis, which will bring further activity to the region for the rest of the year
Ranjit Gill, Director, Head of Industrial Midlands
SEGRO Park Coventry, where Savills is marketing SPC 220 & SPC 140, two speculative units on behalf of SEGRO
Supply
There has been a 30% increase in the supply of big box units, totalling 8.96 million sq ft spread across 43 units. By grade, 39% of space is Grade A new speculative development, 29% is second-hand Grade A space, 14% is Grade B space, and 18% is low-quality Grade C space.
This means 68% of supply is considered good-quality (refurbished) second-hand or new stock, but we are hearing anecdotally from occupiers that their rising power demands, particularly manufacturers, many units on the market currently do not meet the power availability that many occupiers are seeking. When coupled with macroeconomic headwinds and the impact on occupier sentiment, this can explain falling take-up levels.
Currently, there are 23 units available in the 100,000–200,000 sq ft size range, 14 in the 200,000–300,000 sq ft size range, four in the 300,000–400,000 sq ft size range, and two in the 400,000–500,000 sq ft size range. There are no units above 500,000 sq ft.
With supply and demand dynamics realigning, Savills has updated its rental growth forecasts for the West Midlands. In our baseline scenario, Savills predicts a rental increase of 3.2% annually over the next five years, rising to 3.8% annually in the optimistic scenario.
Take-up
With a general slowdown in activity, only 1.53 million sq ft has been transacted across eight deals. This represents a 46% decrease compared to the previous year and a 29% drop below the long-term H1 average. This decline coincides with a 36% decline in recorded requirements in H1 2025 compared to H1 2024, as occupiers pause on their plans.
Despite this decline, it is encouraging to see an increasing number of international companies considering establishing either their manufacturing headquarters or logistics platforms in the West Midlands, which is likely to bring further activity to the region in the medium to long term.
Another factor contributing to the lower take-up is seen when comparing the average deal size. In H1 2024, the average unit size transacted was 259,103 sq ft. In H1 2025, it decreased to 191,797 sq ft.
Regarding specifications, 36% of the space transacted in H1 2025 was second-hand, 38% was newly built speculative development, and 26% was BTS space.
The region recorded six transactions within the 100,000–200,000 sq ft size range, one within the 300,000–400,000 sq ft size range, and one within the 400,000–500,000 sq ft size range. These figures, compared to the long-term H1 average, are significantly below expectations. Typically, there are seven transactions annually within the 100,000–200,000 sq ft size range, three within the 200,000–300,000 sq ft size range, two within the 300,000–400,000 sq ft size range, one within the 400,000–500,000 sq ft size range, and two over 500,000 sq ft.
Occupier activity has primarily been driven by 3PLs, which account for 45% of the activity. The next most significant contributor to take-up was wholesale retailers, at 20%, followed by manufacturers at 17%, further emphasising that manufacturers are establishing a stronger presence in the region.
Development pipeline
Despite a slowdown in take-up, an increase in supply across the region, and the completion of 1.68 million sq ft of speculative development, the market has not yet responded with a reduction in new speculative announcements. In fact, speculative announcements in H1 2025 total 1.22 million sq ft, 43% higher than the entire 2024 figure of 850,000 sq ft. This indicates that developers still believe in the region’s fundamentals, given its historic and robust occupier base, along with its well-positioned geography that can serve a large portion of the UK’s population.
Currently, there are 1.51 million sq ft of space under construction across seven units, with five units expected to be completed in H2 2025 and two in 2026. Four units are under construction within the 100,000–200,000 sq ft size range, two units within the 200,000–300,000 sq ft range, and one unit above 500,000 sq ft, which are two segments of the market that are markedly undersupplied.