Take-up in the West Midlands for logistics units of more than 100,000 sq ft has reached 1.65m sq ft, 47% below the long-term average for the first three-quarters of a year, according to data from Savills.
At the same time, take-up in many other regions across the country has already outpaced the full-year 2017 figures and the long-term annual averages. Indeed, in the East Midlands take-up has reached 5.9m sq ft, 1.7m sq ft ahead of what was achieved in the whole of 2017.
“It is important to note that as buildings in the logistics sector have generally started to increase in size there is now much more volatility in the take-up statistics on a quarterly and half-yearly basis than ever before,” says Kevin Mofid, head of industrial research at Savills.
Just five years ago, there were on average six deals over 500,000 sq ft per year. That now stands at nine, Mofid points out, adding that overall average unit size has increased by 35% since 2009 and now stands at 265,000 sq ft.
As buildings have increased in size there is now much more volatility in take-up
Kevin Mofid, Savills
“It is interesting to examine what has been going on in the market in absolute terms and examine how many actual deals have taken place. Interestingly, by this metric, the market in the West Midlands has always been volatile, with the amount of deals in the 100,000 sq ft to 200,000 sq ft size band ranging from just four deals per year to 21 deals per year,” Mofid explains.
“Moreover there have on average over the past 10 years been three deals per year in the West Midlands for units over 400,000 sq ft and in 2018 so far there haven’t been any.”
Part of this, Mofid says, comes down to supply. There is just one grade-A unit on the market of more than 400,000 sq ft – Panattoni’s recently completed Wolverhampton450.
“With no speculative units currently under construction in the region over that threshold, any further take-up for units of more than 400,000 sq ft will have to be satisfied by build-to-suit,” Mofid says.
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Take-up tumbles in the erratic West Midlands logistics market