Midlands accounts for 48% of UK industrial transactions in H1
Figures from Savills latest Big Shed Briefing show that 48% of UK industrial transactions (units of 100,000 sq ft +) occurred in the Midlands, up from the 10-year average figure of 36%. Deals in the first half grew to 22 from 16 compared to this stage last year.
In 2023, take-up in the East Midlands reached 8.12m sq ft across 26 transactions, a 33% increase above the long-term annual average. In 2024 to date, occupier activity has rebounded further still, with take-up already reaching 5.02m sq ft across eleven transactions, 87% up on the long-term H1 average. As inflation has waned and political certainty has increased, there has also been a resurgence in business activity in the West Midlands with take-up totalling 2.99m sq ft across eleven transactions, 37% above the long-term H1 average.
Despite an uptick in activity, the East Midlands has seen the vacancy rate increase to 8.62%. However, Savills notes that as long as the vacancy rate remains below 12%, there will be continued rental growth within the region. This is due to an increase in speculative completions, as well as growth in second-hand space, which has seen supply rise by 26% when compared to H1 23. Build to suit (BTS) transactions have also risen 108% on levels seen in the same period last year. Savills is seeing a similar story in the West Midlands, where a slight increase in vacant space in H1 2024 has been driven by speculative development completions. Currently, there are 37 units over 100,000 sq ft available, totalling 7.37m sq ft while the vacancy rate currently rests at 7.44%.
Looking ahead, the West Midlands has a promising development pipeline, there are nine units under construction speculatively. Of these, seven are within the 100,000-200,000 sq ft size band, and two are within the 300,000-400,000 sq ft size band. The East Midlands development pipeline has decreased by 47% in the last twelve months, which will help keep the vacancy rate lower and allow for further rental growth. There are now six units under construction, totalling 1.96m sq ft, 26% of which is under offer.
Ranjit Gill, director, industrial, Savills Birmingham, says, “Positivity in the Midlands is in part due to occupiers taking advantage of rising supply, which now stands at 18.67 million sq ft, but also the lease event cycle with Savills estimating there are 6.6 million sq ft of lease events due in the Midlands in 2024. This demonstrates that whilst we have seen the logistics market expand over the last decade, ultimately the Golden Triangle remains golden.”
