Eight years after the first symptoms of the global recession the West Midlands economy has at last returned to “rude health”, according to Lambert Smith Hampton’s (LSH).
In the agency’s latest Industrial and Logistics Market Review it highlights at least seven deals of more than 100,000 sq ft – the majority falling within the fabled “golden triangle” of the M6, M1 and M42 motorways.
The biggest transaction saw British-based home furnishings retailer Dunelm taking 525,000 sq ft at Prologis Park Sideway, close to Junction 15 of the M6 at Stoke-on-Trent. Others included Jaguar Land Rover snapping up the extension plot at Prologis Park Midpoint in Minworth, pushing its total letting on the estate to 477,000 sq ft, and Screwfix taking 230,000 sq ft at DC4 Prologis Park Midpoint in Stafford.
“There is a pipeline of speculative development that will be coming to market over the next 12 to 18 months, but the lack of sites within the golden triangle means developers are looking wider afield,” explained Matthew Tilt, associate director of industrial and logistics, at LSH in Birmingham.
“The challenge is that much of the big-box development in the region is pre-let so there will remain supply issues in that part of the market for some time to come.”
“In the mid-box sector we are seeing some welcome speculative builds with developers like St Modwen, Goodman and IM Properties very active in the region with schemes underway at The Hub in Birmingham, Lyons Park in Coventry, Birch Coppice in Tamworth, and Burton Gateway in Staffordshire,” he added.
Focusing on the big-box sector, the LSH review claims that a host of major pre-lets is driving development in the region with Prologis about to start work on DC7 Ryton having secured deals of more than 450,000 sq ft with UK Mail and Jaguar Land Rover.
IM Properties is also developing two units at Birch Coppice in Tamworth, slated for completion in late 2016, after agreeing major deals of more than 900,000 sq ft with Euro Car Parts and UPS. And the speculative Chrome 102 scheme in Minworth is due for completion in February next year after Bericote agreed a deal with Asda for Unit One.
An on-going lack of supply means that there are currently limited opportunities for occupiers — big and small — with multi-let industrial estates currently experiencing historically low vacancy rates.
Tilt stresses that with the dearth of quality accommodation, landlords currently hold the whip hand over occupiers. “It is undoubtedly a landlord’s market,” he said.
“The shortage of Grade A space means we are seeing landlords holding out for longer lease terms, with up to 15 years with no break options now becoming the norm for prime buildings.”
