As manufacturing firms continue to seek expansion opportunities, industrial take up levels in a number of regions have seen records broken, with the West Midlands enjoying high levels of interest. But in the North West a lack of quality supply has begun to limit industrial growth in the region.
According to DTZ’s Industrial Property Times report for 2014, take up in the North West last year totalled just over 4 million sq ft, a 2.7 million sq ft drop when compared to the previous year’s results. The property group believes that this is due to restricted supply which is no longer adequate to meet occupier demand.
Fortunately, it seems that 2015 will be a more positive year in this respect as four speculative developments have recently been approved for the industrial sector. These will be located in Knowsley, Chorley, Heywood and in close proximity to Manchester Airport, and all are due to be completed by the third quarter of this year.
Director of the industrial agency at DTZ’s Manchester office, Tony O’Keefe, believes that these developments will allow take-up to rise in the North West this year.
He says; “Whilst overall take-up figures were down on 2013 this can be explained by limited availability of quality built space and delays associated with land and pre-let deals, as opposed to a reduction in demand.
“A new wave of speculative development will see over 500,000 sq ft of new development this year over four schemes, with another 1.6 million sq ft across seven schemes in the development pipeline – this provides an excellent yard stick measuring confidence in the region.
“Confidence is underpinned by restricted supply and continued occupier demand as demonstrated by the recent success of the region’s largest development sites, Logistics North being a pertinent example.”
The report, while warning of the dangers of a shortage of supply in the region, is largely positive, with the highlight being the re-emergence of speculative development activity during 2014. Furthermore, it goes on to state that the shortage of supply fuelled investor appetites for prime space, with the result that a record £6.1 billion worth of transactions were conducted for industrial units in the UK as a whole.
DTZ research analyst Michael Green points out that this is extremely good news for landlords, as prime rents for industrial properties are expected to climb further as 2015 progresses and demand remains high.
He continues; “Looking ahead to 2015, the need for speculative development will continue with more schemes across the UK set to be announced.
“We also anticipate the high levels of take-up to be maintained over the next five years as industrial output increases and occupiers look to increase their UK footprint, although continued difficulties in the Eurozone may have a dampening effect.”
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