Increased demand for industrial property in the Midlands is leading to more design & build20th January 2014

According to a new survey of the Midlands by real estate company Cushman & Wakefield, 2013 was a record for the take-up of industrial properties over 100,000 sq ft.

Around 34 deals involving properties of this size took place, totalling 8.7million sq ft, a massive improvement on 2012, when there were 22 deals totalling 5.2million sq ft.

David Binks, industrial partner at Cushman & Wakefield in Birmingham, said: “Last year was the highest for take-up since the financial crisis of 2008.

“The big problem now is that we are limited by a lack of Grade A stock above 100,000 sq ft. After six lettings of such buildings last year, there are only three left in the entire region.”

At the same time as take-up has risen, so has demand. According to Cushman & Wakefield’s statistics for the year, the number of enquiries increased by ten per cent in 2013, compared with 2012.

David Binks said: “The increase in demand for industrial property was witnessed across all sizes. However, good quality stock availability is now very limited. Many companies are struggling to find suitable accommodation and in an increasing number of circumstances those with requirements have realised that if they want space, they will have to look to the design and build market.”

Among the 34 deals that contributed to the 2013 total was supermarket giant Sainsbury, which took a one million sq ft property at the Prologis site at Daventry International Rail Freight Terminal. Cushman & Wakefield advised on this deal.

David Binks said that the defining factor of the market in 2013 was the re-emergence of design and build. This accounted for more than half of the take-up in 2013 in the West and East Midlands.

“In the past 12 months, there has been a re-emergence of this, because of the lack of existing stock – people have been forced to go down the design and build route. This is set to continue in 2014 as demand continues to improve.

“As confidence continues to grow occupiers are feeling less risk averse, with more willing to commit to having bespoke facilities constructed and making longer term commitments.”

The confidence in the market has also re-started the development cycle. Among developers returning to building on a speculative basis in 2013 were Prologis and IM Properties. New speculative developments in the Midlands include Birch Coppice near Tamworth (169,000 sq ft), Prologis Park at Ryton (225,000 sq ft) and Brackmills Distribution Park, Northampton (110,000 sq ft).

“The outlook for the industrial market in 2014 is encouraging. Those developers with sites ready to move forward and those who have good quality buildings available should see positive interest in their sites and buildings. Those occupiers with requirements who are thinking of relocation or expansion should start their searches as early as possible to avoid disappointment.”