Birmingham's industrial market is the strongest in the UK, according to new research from Knight Frank.
The city is ranked in second place in the property agent's annual Global Real Estate Forecast, with Paris and Dublin ranking first and third respectively.
Europe's industrial markets have weakened slightly as manufacturing output suffered in light of the wider economic slowdown in the early part of the decade.
However, consumer confidence has generally remained high in Western Europe and the rapidly maturing consumer markets of Eastern Europe are generating demand for industrial warehouse space.
Simon Spencer, head of industrial agency at Knight Frank's Birmingham office, said: "The market has steadied in the region and I expect this to continue well into 2005 and beyond - the Midlands is still the place to fulfil your warehousing and distribution requirements.
"We have retained a strong manufacturing base, despite bulk manufacturing largely relocating overseas due to lower unit cost production. Production continues to build in niche areas and we have a strong specialist component industry, especially in the automotive sector."
He added: "The market will remain active and the level of freehold acquisitions of units less than 100,000 sq ft by owner occupiers will continue to rise.
"Larger units - those above 100,000 sq ft - will help to keep the leasing market healthy, with one exception being large parcel depot requirements where the preference is to purchase land and build their own units.
" Birmingham's natural advantage is its location - at the heart of the country with immediate access to an unrivalled motorway network.
"In terms of industrial space, the West Midlands will remain top of occupiers' lists when it comes to securing distribution locations because, although there are cheaper locations elsewhere, there is the full range of product to suit every requirement - from 40,000 sq ft up to 1,000,000 sq ft."
The research document took into account 20 weighted property, economic and demographic variables and in 2004 Birmingham was also ranked top in the UK.
Key schemes which have come to the market in the past year include The Hub - Birmingham's largest warehousing and industrial development offering up to 1,600,000 sq ft - plus smaller schemes offering buildings under construction such as Prologis at the Fort (164,000 sq ft), Express Point in Erdington (105,000 sq ft), and First Point in Burton (210,000 sq ft).
Catherine Penman, head of global research, at Knight Frank, said: "Our research highlights an overall weakening in Europe's industrial marketplace.
"But more positively it reports that consumer confidence in western Europe remains strong and that rapidly maturing consumer markets of eastern Europe are creating demand for industrial warehousing solutions."