Demand for industrial and logistics property in the Midlands outstripped all other regions in the UK during the first quarter of 2010, according to new research.
Take-up during the quarter was more than 2.25 million sq ft – 51 per cent of total take-up of industrial and logistics property in the UK. The South-east region was the second highest with 34 per cent.
According to CBRE’s research, take-up of logistics property in the first quarter of 2010 was 4.5 million sq ft, the second highest quarterly result since the fourth quarter of 2007.
This take-up level returns the market to the longer-term average of close to 4.6 million.
In the Midlands, recent key deals included Boots’ occupancy of Opus Axis, a 463,000 sq ft building in Burton on Trent; Oxford University Press’ 402,000 sq ft letting at Zone C, ProLogis Park, in Kettering; and 99p Stores’ 373,000 sq ft letting at ProLogis Park in Northampton.
In addition, a number of significant deals are in the pipeline, including Tesco’s acquisition of 800,000 sq ft at ProLogis Park at Dirft, on a 20 year lease, and Marks & Spencer’s intended take-up of one million sq ft at East Midlands Distribution Centre.
Richard Meering, head of industrial agency at CBRE in Birmingham, said: “As the research demonstrates, the Midlands continues to be the dominant region in the industrial and logistics property sector.
“Take-up in the region accounted for more than 50 per cent of the market, with the majority of the deals during the quarter being a combination of existing speculative buildings, built in the last few years, such as Opus Axis and Zone C ProLogis Park, and large design and build commitments, with one of the first notable pre-lets being Gazeley’s deal with Butchers Pet Foods at Crick for a bespoke 240,000 sq ft new production facility.
“As a result of the high level of demand, there has been a significant reduction in the number of existing modern speculative units.”
According to CBRE’s research, supply appears to have peaked in the UK logistics market in the last quarter of 2009 at 55.4 million sq ft. During the first quarter of 2010, available space declined by 2.5 million sq ft to 52.9 million sq ft – a five per cent drop in supply over the quarter.
In the Midlands supply peaked at 24.7 million sq ft by the end of the final quarter of 2009 – a 28 per cent increase from 15.35 million sq ft in 2008 – as a result of a hardening economy forcing many businesses into administration or to downsize. During the first quarter of 2010, take-up increased significantly, seeing Midlands availability drop to around 22 million sq ft.
Mr Meering added: “Improvements in the take-up of logisitics property led to increased institutional activity. With supply levels starting to decrease, and encouraging first quarter levels of take-up being sustained in the early days of the second quarter, the UK logistics market is gaining positive momentum.
“However, these trends, if they continue, will only add further fuel to the speculative development debate.”