While the Midlands continued to dominate industrial occupier activity, the North West has seen significant recovery with just over three million sq ft of space taken in H1 2015, accounting for 18% of total take-up in the first half of the year, according to Knight Frank’s new LOGIC report.
Following exceptionally strong occupier demand throughout 2014, demand for units above 50,000 sq ft eased off somewhat during the first six months of 2015. A total of 16.8 million sq ft was acquired for occupation in H1 2015, 27% down on H2 2014.
Supply shortages have continued to leave occupiers with a lack of choice, particularly in the wider South East and Midlands regions, where Knight Frank explain they expect to see considerably more speculative development delivered to the market over the next couple of years.
Charles Binks, partner of logistics and industrial agency at Knight Frank, comments “While the first half of 2015 has seen a steady take up of standing stock, shortages experienced in the South East and Midlands in 2014 are now spreading to other areas of the country.
We believe that the current wave of speculative development will mirror this trend, albeit at considerably reduced levels from that experienced before the financial crash, leading to rental growth across all unit sizes for both new and good quality second hand space”
In the UK industrial investment market, just under £3.0bn of industrial assets change hands in the first half of the year, relatively subdued activity compared with the record £4.2bn achieved in H2 2014.
Louisa Rickard, associate of commercial research at Knight Frank explains “This result reflects lack of suitable opportunities in the market; however we are seeing investor demand remain strong for prime properties and investors benefiting from accelerated rental growth.
“While prices have continued to harden, helped by the realistic prospect of rental growth, yields for single-let distribution and multi-let estates compressed further during H1 and we expect to see yield polarisation between prime and secondary assets continue to narrow.”
