East Midlands

31 January 2017, by Charles Spicer

The East Midlands remains a key location to take new warehouse space as 2016 take-up levels demonstrate, however, with just 272,494 sq ft due for delivery, Grade A supply issues could emerge into 2017

 

 

 

▲ Mountpark Bardon: location of new Amazon Fulfilment Centre

Supply

■ Current supply in the East Midlands stands at 4.7m sq ft across 25 separate units, an increase of 7.8% since Q1 2016.

■ Whilst the supply of second hand Grade B units has decreased from 3m sq ft to 1.2m sq ft, as demonstrated by figure six, this has in the most part been replaced by speculatively developed stock. There are currently seven speculatively developed units on the market including the M&G funded Optimus 277 in Leicester and Interlink 255, also in Leicester.

■ As with most regions, supply is skewed towards the smaller end of the spectrum with just four units on the market over 300,000 sq ft, the largest being Quantum at Magna Park Lutterworth at 411,613 sq ft.

FIGURE 6

Supply by grade

 
Figure 6

Source: Savills Research

Take-up

■ Assisted by 2.8m sq ft being transacted in the fourth quarter alone take-up for the year end reached 6.9m sq ft, beating the long term average by 68% and meaning 2016 was the best year ever for the East Midlands.

■ The largest deal of the year was Amazon taking a 1.3m sq ft pre-let at Mountpark Bardon, however by deal count the 3PL and manufacturing sector accounted for a further 57% of the market taking a total of 13 units. Examples include Howdens taking two new units at Roxhills Warth Park in Raunds totaling 957,000 sq ft and Yusen Logistics committing to a build to suit unit of 379,000 sq ft at Prologis Park, Wellinbourough.

■ These larger deals helped the average size deal increase above the long term average to 287,000 sq ft, the highest level since 2011, as demonstrated in figure eight.

■ Driven by these large bespoke facilities, for the first time ever more than 50% of the market in the East Midlands has been for build to suit units.

FIGURE 7

East Midlands take-up

 
Figure 7

Source: Savills Research

Development Pipeline

■ With 2016 seeing just three speculative announcements a total of just 272,494 sq ft is due for delivery in 2017.

■ Prologis will deliver 156,000 sq ft in Kettering and 115,000 sq ft at DIRFT, phase III, both in Q3 2017.

FIGURE 8

Average size deals

 
Figure 8

Source: Savills Research

TABLE 2

Key Stats

 
Table 2

 

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Key Contacts

Charles Spicer

Charles Spicer

Director
Industrial & Logistics

Savills Birmingham

+44 (0) 121 634 8407

 

Kevin Mofid

Kevin Mofid

Director
Commercial Research

Savills Margaret Street

 

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