Despite falls in commercial property rents and available Grade A space, the West Midlands region has still managed to be 25 per cent ahead of a five year average in terms of take-up.
Commercial property take-up in West Midlands was down 10.4 per cent, which equates to 13.1 million sq ft of space, according to research conducted by Lambert Smith Hampton (LSH). However, this surpassed the East Midlands region take-up by 2.3 per cent despite being a smaller region.
The main reason for the decline in commercial property take-up was the fall in acquiring larger buildings, which in 2010 equated to 4.9 million sq ft; however in 2011 this fell to 3.6 million sq ft. Nevertheless, despite the decrease in take-up, overall the West Midlands area remains 25 per cent at the forefront of a five year average.
The overall availability of commercial property space rose to 51.6 million sq ft. This was made up with an 11 per cent rise in Grade B and C space, but available Grade A space declined by 18 per cent.
Speaking of the slowdown of available Grade A space, Steve Williams, spokesman at LSH, said: “Our findings show that prime rental values are on the increase in strategic locations where there is little or no grade A space available. This market imbalance will cause the market to tip in favour of landlords who own quality space, allowing them to harden their stance on rent and incentives.
“Grade A availability currently stands at the lowest it has been for five years. In most size bands this represents 12 months of supply, with the most acute shortage in the distribution warehouse sector, where supply is down to six months based on 2011 take-up levels.”
Staffordshire saw the largest deal of the West Midlands region in 2011 with Amazon taking out a 15 year lease on a warehouse in Rugeley at a rate of £3.95 per sq ft for 707,488 sq ft of space. Birmingham saw the second largest deal in the region with Kuehne & Nagel acquiring 237,134 sq ft of space at a higher rate of £4.95 per sq ft.
Speaking of the acquisitions, Steve added: “Third party logistics companies continued to dominate the distribution sector, accounting for 55 per cent of activity. However, an increase in activity in the manufacturing sector was also evident with the sector accounting for 20 per cent of all take-up.”
