Occupier demand for industrial, warehousing and distribution space in key locations across the West Midlands has been increasing during the last 12 months.

This, combined with other factors, has created the environment for industrial rents in the region to start growing.

The Midlands industrial market is currently benefiting from an overall UK and global trend of increasing levels of corporate consolidation, mergers, acquisitions and company restructuring.

Businesses are now actively seeking to rationalise their distribution networks in order to streamline their operations and enhance efficiency to perform in an increasingly competitive marketplace.

Simon Lloyd, national head of industrial agency at DTZ, says: "Company restructuring is happening on a global basis and initial relocation decisions are based around countries and regions rather than specific sites or developments.

"For instance, a company will rationalise its distribution network and centralise its UK or European operation in the West Midlands rather than another area because of the region's central location and transport links."

The market is also being shaped by a drive for quality in its industrial space.

High specification units on well-maintained estates are in demand due to the perception of increased efficiency that quality brings - for example, cost savings through greater energy efficiency.

A company's stakeholders, such as customers and staff, are also demanding increased quality, as Mr Lloyd explains.

"Companies appreciate that property has an important role to play in attracting and retaining staff so are adding quality to their list of occupier requirements," he says.

Another key factor that is set to have an impact on rents in the region is the increase in building and construction costs.

Increased demand for quality industrial space is one of the reasons behind this but another key factor is the revised part L the building regulations, which have just come into force.

The regulations place greater emphasis on the energy efficiency of buildings and explicitly relate to reducing carbon dioxide emissions aiming for a 25 per cent improvement on the previous Part L targets.

"The new regulations affect all areas of the construction and property industry from builders, owners, tenants, designers, and manufacturers to building control bodies and maintenance contractors," says Mr Lloyd.

"All new buildings will have to meet a minimum energy performance requirement and will be issued with a certificate detailing their energy performance, allowing comparisons to be made between different buildings according to their energy profile.

"This will have a direct impact on developer build costs and potentially on rental levels in the region."

Investor demand for industrial property is still strong in the West Midlands.

Investment yields have been artificially suppressing rental growth, upsetting the balance between supply and demand.

The balance between supply and demand needs to be reset and if investment yields plateau rents may be forced to rise.

Increased demand, especially for good quality sites, will also help to reset the balance and help push rents up.

Despite a healthy land supply being delivered to the requirements.

"While there is a steady stream of land coming on to the market in the region, it may not be suitable for all Midlands occupiers," says Mr Lloyd.

"For example, some land may have restrictions on use, for example it might be suitable for a technology or business park rather than for a distribution facility.

"Shortage of supply of land and developments that are well-located and meet occupier requirements will increase prices. Growth in the market is also being driven by a number of new speculative developments, due for completion this year, all of which will satisfy occupier demand due to their good locations and high build quality."

Mr Lloyd points to the Church Commissioners' io centre in Redditch, a new complex of three industrial units with 64,970 sq ft of industrial space, and Opus 9, a 25-acre joint venture between Opus Land and Arlington Property Investors just off junction 25 of the M6 at Wednesbury