According to property consultancy Lambert Smith Hampton, confidence is beginning to return to the industrial and distribution sectors of the West Midlands commercial market. The return of speculative investment in the sector is one of the indicators the market is showing signs of improvement.
Alex Carr, the consultancy’s director of industrial and logistics stated recently that the company became the region’s first developer in the past five years to build large-scale industrial warehousing.
The company has constructed two logistics units measuring 334,500 sq ft at Birch Coppice Business Park off the M42 in North Warwickshire. This property has already welcomed major tenants such as Volkswagen Group, UPS, Euro Car Parts, Roadways Container Logistics, and Ocado.
According to Mr. Carr, there are other signs that the situation is improving. The government is moving to encourage further speculative schemes and will exempt all newly-built commercial property completed between October 1, 2013 and September 30, 2016 from empty property rates for the first 18 months. Developers approve of this move.
Mr. Carr went on to point out that with demand for Grade A industrial space remaining high, developers are facing increased pressure to consider speculative development as the supply pool continues to decline. Landlords of existing buildings are holding out for longer leases and strong headline rents. Some of them are refusing to offer incentives of more than six months rent free on a five-year lease.
There is a distinct difference between the north and south areas of the West Midlands. Higher rents, and availability rates are the norm in the south. Occupiers looking for premises usually want to focus on finding space close to the key automotive hubs in Birmingham, Coventry and Wolverhampton.
These are the locations where the highest rental growth and the majority of speculative development is expected in the coming months.
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