Midlands industrial review of 2016

Industrial marches on

Despite the market’s best endeavours to produce as much new Midlands industrial and warehousing stock as possible, supply still falls short of the current insatiable demand.

There are as many pre-lets occurring as there are lettings of new buildings. Whilst some occupiers require a specific type of building that would preclude them from taking an existing building, the majority of transactions have had to pursue the design and build route because the type and grade of available stock is not sufficient for their purposes.

Key design and build transactions

  • Screwfix – 562,000 sq ft, Prologis Park, Fradley
  • Sainsbury’s – 325,000 sq ft, Prologis Park, Northampton
  • Palletforce – 260,000 sq ft, Burton-on-Trent
  • Amethyst – 210,000 sq ft, Wellesbourne Distribution Park
  • Dwell – 151,000 sq ft, Prologis Park, Milton Keynes
  • Birlea Furniture – 74,000 sq ft at East Midlands Distribution Centre, Castle Donington
  • Hellerman Tyton – 63,000 sq ft, Kingswood Lakeside, Cannock

Notable new build developments

Location  Developer  Sq ft
Nash Road, RedditchSt Francis Group400,000
Prologis Park Birmingham InternationalPrologis310,000
Hams Hall, ColeshillCanmoor310,000
Birch Coppice, BirminghamIM Properties282,000
Prologis Park, Milton KeynesPrologis275,000
Chrome, MinworthRockspring270,000
Pensnett Trading Estate, KingswinfordLCP260,000
Centurion Park, TamworthSt Modwen153,000
Daventry International Rail Freight TerminalPrologis116,000
The Hub, BirminghamIM Properties110,230
Site E, Kingswood Lakeside, CannockTrebor Developments100,000
Apollo, Advanced Manufacturing Hub, BirminghamTrebor Developments94,500
C75, Coventry AirportChancerygate75,350
Airfield, AldridgeTrebor Developments55,000

Prologis Park Birmingham International

Prologis Park, Birmingham International

Yields have sharpened to a point

We may see yields soften in some areas. This will not be on prime stock, as there are only so many prime distribution locations in the country, and these will continue to attract really strong yields. Perhaps, the slightly secondary markets will soften by a quarter to half a point. There is no lack of appetite for prime investments.

Smaller stock is thin on the ground

On the smaller side of the market, in the multi-let industrial estates, the only real availability of buildings is coming from those occupiers who were acquiring space c. 2011. These occupiers have enjoyed the last 5 years on really advantageous terms – due to where the property market was at, at time of signing the lease. They are now facing lease renewals with rent increases of 30-50%. As a result, some of these units are coming back to market and are snapped up as soon as they become available.

2017 outlook for industrial space

As the recession caused the time lag in development, it is likely that it will take up to a further 3 years for the supply to come back. As such, we anticipate the next 12 months will see a continuation in rate of take-up, and with that, continued rental increase, as well as a reduction in incentives.

For more information

Download KWB Office and Industrial Market Review 2016.

For more information on Midlands industrial space, please contact Kenny Allan on 0121 212 5996 or email kallan@kwboffice.com.

Want to know more?

Contact Kenny Allan

0121 233 2330