Industrial Market Review

West Midlands industrial & logistics market review

The acute shortage of grade A supply continues for the West Midlands industrial & logistics market and consequently, landlords are holding out for longer lease terms; up to 15 years with no break option on prime buildings. 

With robust levels of occupier activity led by retailers, third party logistics (3PLs) and the automotive sector, we have also seen tightening of tenant incentives across all size ranges and rents of up to £6.50 per sq ft achieved.

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In this issue:

Key transactions H1 2015

Property   Size (sq ft)  Occupier  Rent per sq ft/price 
Prologis Park, Stoke-on-Trent  525,000  Dunelm  £4.50 
DC4 Prologis Park Midpoint, Minworth  312,000  Jaguar Land Rover  £5.95 
DC4 Prologis Park Midpoint, Stafford  230,347  Screwfix  £5.25 
Swift Central, Rugby  211,725  The Range  £5.50 
Unit 6 Parkway, Wednesbury  132,516  Alco Metals  £5.25 
DC1 Prologis Park Midpoint, Minworth  127,500  Syncreon  £6.35 
Plot J3 Central Park, Rugby  100,000  Kelway Distribution  £5.57 
Stafford 70, Stafford  69,826  H H Solutions  £1,850,000 
Solihull Business Park, Solihull  53,599  Inner Workings  £6.50 
Unit 8, Junction 6 Industrial Estate 30,616  Mecalux  £5.75 

Current industrial supply

  • Multi-let industrial estates are experiencing low vacancy rates, with rents and lease lengths increasing, and tenant incentives reducing.
  • Fradley Park in Lichfield has 29,250 sq ft, 102,174 sq ft, and 126,580 sq ft available, with strong interest.
  • The former 208,186 sq ft UK Mail premises at Wolseley Drive in Birmingham is available from August 2015 and offers the rare benefit of being available short term.
  • Other availability includes Minworth Central at 164,311 sq ft, Unit 16 Junction 6 Industrial Estate at 117,710 sq ft, and 5010 Middlemarch Coventry at 165,785 sq ft.
  • In the mid-box sector (50,000 – 100,000 sq ft), rents of £6.50 per sq ft have been reached and in the big-box sector (100,000 sq ft +), we have seen rents of £6.35 per sq ft.

View West Midlands headline rents per sq ft 2015.

Speculative development underway across the region

  • In the big-box sector, Prologis will commence work during September 2015 on DC7 Ryton after agreeing a freehold sale and development of 231,000 sq ft to UK Mail Plc, and an additional 225,000 sq ft let to Jaguar Land Rover.
  • At Birch Coppice in Tamworth, IM Properties is developing two units, available in Q3 2016, after agreeing 778,000 sq ft to Euro Car Parts, and 152,500 sq ft to UPS. 
  • Bericote are on site at Chrome 102 in Minworth with completion due February 2016 following the pre-sale of Unit 1 to ASDA. 
  • Silver Bullet at Hams Hall has been completed by Canmoor, with work planned for a second speculative unit known as Black Velvet.
  • Much needed development is also planned for the mid-box sector with IM Properties speculatively developing at Birch Coppice, and two units at The Hub in Birmingham, to be completed by Q1 2016. 
  • St Modwen announced speculative builds at Burton Gateway, Centurion Park and Great Western Business Park.
  • Five units are under construction by Goodman at Lyons Park in Coventry.

View the region's pipeline speculative development here.

Outlook for the remainder of 2015

  • Landlords will continue to hold out for better lease terms.
  • Rents will continue to rise across all size ranges.
  • Occupiers and developers will need to consider opportunities in secondary locations.
  • Retail, automotive, and 3PL sectors will continue to lead requirements.
  • We anticipate further announcements of speculative development.

How has the investment market performed in 2015?

Investment within the industrial sector has continued at a pace throughout 2015. We have seen yield compression across the board, buoyed by resilient occupier demand and a lack of available stock. While the return of speculative development within the distribution market may start to rebalance some of the mismatch between demand and supply, there remains favourable conditions for rental growth which is naturally appealing to the investment market. Notable deals during H1 include:

• B&Q Distribution Facility, Worksop - £89.75m (5.13%)
• Bunzl Interlink Park A, Bardon - £6.25m (5.77%)
• New Look, Lymedale Business Park - £30.05m (5.9%)

Read our latest UK Investment Transactions (UKIT) report.

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Matthew Tilt

0121 237 2347

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Matthew Tilt
Director - Industrial Agency

0121 237 2347

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