Midlands Running Out of Warehouses

Posted on 12 December, 2012 by Neil Bird

Due to its central location and easy access to the motorway network, the Midlands has established itself as a core logistics and distribution hub. Overall, 14 per cent of the stock on the market is stored and transported from the region’s 20.4 million square feet of warehouse space.

This makes the logistics sector a key provider of employment and a significant contributor to the Midlands economy since the decline of the heavy industries on which it once depended. Now a new report reveals that the region is set to run out of large logistics property within the next 12 months.

The BNP Paribas Real Estate Logistics Index shows that the Midlands has only 3.1 million square feet of warehouse space over 250,000 square feet currently available. This is down from a high of five million square feet in 2009. The decline in available space is a result of robust demand coupled with a shortage of speculative developments due to the difficulties in securing finance for these projects in the current economic climate.

Take-up of warehouse space in the region in the third quarter of 2012 was 4.4 million square feet which accounts for the majority of nationwide transactions during the period. Even more encouragingly is the fact that the Midlands now has a 30 per cent share of the total UK market. At the same time rental values in the logistics sector remained positive despite a fall in most other regions.

BNP Paribas expects take-up to remain robust throughout 2013, but with quality stock at its lowest level since 2008, this presents a barrier to future growth in the market unless a solution to the unavailability of speculative finance can be found.




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