However, activity was down 12.4% on the previous year’s levels and the lowest since 2007 according to our latest research report, Industrial and Logistics Market 2013.
SMEs cause take-up to fall by 50%
The most significant downturn in activity was seen in Greater London and South East markets where activity was down by 41% and 45% respectively but the North West proved more resilient aided by improving levels of demand from the manufacturing sector.
Take-up of medium sized business units up to 50,000 sq ft fell significantly with overall activity in the UK down 34% on the previous year. The North West registered a decline in excess of 50% on the previous year’s figure. This is partly explained by the lack of stock, but also due to the performance of the SME sector being greatly affected by the buoyancy of the economy.
Grade A demand up, but dwindling stock is a hindrance
Prime rents continued to remain stable in the North West with secondary rents also stabilising. Availability increased 6% but grade A supply continued to reduce, falling to 3.2m sq ft. This was reflected across the UK as a whole with only 10% of grade A stock available on the market despite attracting 30% of overall demand.
Manufacturing and Internet retail markets push take-up
The manufacturing sector was particularly active in 2012 with companies such as Tygavac, Ferguson Polymer, and Comfy Quilts all taking expansion space in the North West. Other key deals included Asda’s purchase of a 600,000 sq ft distribution centre in Rochdale for £325,000 per acre and the letting of 405,365 sq ft industrial unit in Ellesmere Port to Jaguar Land Rover for £4.45 psf.
After a decade in obscurity the Mid Box market (c50,000 to 100,000 sq ft) appears to have made a resurgence with both manufacturers and particularly internet related logistics companies taking space in this category.
Speculative development will return to satisfy demand
Andrew Aherne, Head of Industrial & Logistics in our Manchester office commented: “We believe the lower levels of activity in 2012, were due to the reduced stock of grade A space, down 60% from 5 years ago. Several developers have begun preparing sites for the next development cycle. Canmoor, owners of SEGRO’s Trafford Park and Heywood portfolio, are preparing sites for development and it is anticipated that there will be further small scale speculative schemes starting in 2013 to meet increasing levels of demand.
“At the large scale logistics end, Lancashire County Developments has commenced building a 336,000 sq ft crossed docked facility 1.5 miles from junction of M6 M61 & M65 interchange and comprises the largest speculative development in the country. The unit is designed to be able to sub divide if necessary and reflects the resilience of this sector of the market in the NW”.