The Midlands scored the largest take-up of industrial and logistics property in the UK in the second half of 2016, according to latest research from property consultancy Knight Frank.
The firm’s newly published Logistics and Industrial Market Report reveals that the region accounted for 38 per cent of total take-up (8.2m sq ft) in the period July-December 2016. London and the South East trailed with 22 per cent (4.77m sq ft) while the North West racked up just 11 per cent (2.38m sq ft).
The industrial and logistics sector shrugged off Brexit, with occupational activity across the UK increasing by 34 per cent on H1 2016.
In the Midlands, take-up outpaced the national average, at 36 per cent up (8.2m sq ft) on the previous six months. Take for the year, at 14.3m sq ft was up 18 per cent on 2015 and 23 per cent ahead of the five year average of 11.6m sq ft.
The largest transaction in the region during this period was the 562,000 sq ft letting to Screwfix at ProLogis Park, Fradley, Lichfield. The pre-let of 543,000 sq ft to Gestamp Tallent at Bericote Properties’ Four Ashes, Wolverhampton was a near second.
Distributors were responsible for the lion’s share of take-up across the region in H2, accounting for 79 per cent. This was apportioned between retailers (22 per cent of total take-up), third party logistics operators (19 per cent) and on-line retailers (17 per cent).
Manufacturers took 20 per cent of available space, with the automotive sector responsible for around half of that (9 per cent).
58 per cent of space absorbed was pre-let or design and build; second-hand space accounted for 25 per cent while 17 per cent of take-up was new existing space.
According to Jon Ryan-Gill, partner and head of the industrial agency team at the Birmingham office of Knight Frank, stock levels in the region are now perilously low.
He said: “We have just two months’ supply of new build stock available, and around four months’ of second hand space.
“Thankfully there is more speculative development coming through, with 2.1m sq ft already under construction by the close of 2016. A further 1.3m sq ft is planned for late 2017 and early 2018.”
He added that space constraints are pushing rents towards new highs of £7 per sq ft in prime locations. Investors continue to favour the sector.