Rents in the Midlands’ ‘big shed’ sector (in excess of 100,000 sq ft) are now returning to their pre-recession levels.
According to Colliers International’s Industrial and Logistics Big Sheds Rent Map 2013, rents on new, prime space have increased in 11 out of 12 locations across the region over the last year. Top average rents of £5.50 per sq ft are now being achieved on existing modern buildings in Birmingham East and South, Coventry and Northampton. Only Gloucester did not see a rise, with average rents plateauing at £4.50 per sq ft, which along with Stoke-on-Trent is now the cheapest rent in the region.
The largest rise was in Leicester, where rents rose by 75p per sq ft, to £5.25 per sq ft.
Rents on secondary sheds (ie: those built in the early 1990s) are also beginning to move north.
Once more Leicester topped the table, putting 50p per sq ft on average rents for second hand space, which are now averaging £3.75 per sq ft. Rents in the East and South of Birmingham, Coventry, Northampton, Stafford and Stoke-on-Trent also rose. In the North and West of Birmingham, Derby, Gloucester and Nottingham rents remained fairly static.
With the exception of Gloucester, Stafford and Stoke-on-Trent, industrial land values across the Midlands also climbed. Leicester and Northampton are now fetching the highest prices, £375,000 per acre, with Leicester adding £100,000 per acre in the last year. At £150,000 per acre Stoke-on-Trent’s industrial sites are the cheapest in the region.
Simon Norton, joint head of the Industrial and Logistics team at the Birmingham office of Colliers International, welcomed the overall trend.
He said: “Areas of Birmingham and Coventry are benefiting from the good fortune of Jaguar Land Rover, with suppliers down the supply chain acquiring more space and eating into stock. This is driving rents and land values north.
“Leicester has profited from the scarcity of space in the favoured Golden Triangle. Its location on the periphery has made it the go-to alternative.
“For occupiers, things are now starting to get critical. Across the entire region there are just two 300,000 sq ft oven-ready buildings, whilst in the West Midlands we have just five turnkey solutions of 100,000 sq ft plus. Even stock that has been on the market for some time, such as Stoke’s Blue Planet – recently leased to JCB – has been snaffled in the last few years.
“As a result, many occupiers will be forced down the design and build route. IM Properties’ decision to build some speculative space at Birch Coppice Tamworth is welcome; I suspect developers like Prologis and Goodman won’t be too long to follow IM’s example.
“As well as rents climbing, we are also seeing incentives reducing. Whereas previously tenants could expect 12 months rent-free on a five-year lease, typically it’s now 6-9 months.”
