The North West industrial investment market witnessed a moderate decline in the first half (H1) of 2024, as total transactions amounted to approximately £538 million. This figure is 7% below the five-year H1 average of £579m, according to a new report by industrial and logistics property consultancy B8 Real Estate (B8RE).
Despite the challenging economic environment, the report highlighted the market showed resilience in certain areas. While the total value of North West industrial transactions in H1 2024 was £538m across 32 deals – a significant decrease from £979m across 29 deals in H1 2023 – when excluding the major £480m acquisition by Blackstone in H1 2023, the H1 2024 figures exceed the previous year’s £499m, based on 28 deals.
Demand was strongest for prime assets and those with short-term value-add opportunities. In contrast, secondary, tertiary, and ‘dry income’ opportunities experienced the weakest demand. The market’s supply remained restricted due to investors holding assets in anticipation of future pricing improvements. Overall pricing remained depressed, with a widening gap between prime and secondary assets. Speculative funding opportunities were challenging but feasible for high-quality schemes with low land values.
Despite the overall decline, investor interest in the North West industrial sector remained robust, particularly for value-add assets and the industrial open storage sub-sector, according to the report. Overseas investors continued to dominate the institutional market, with significant activity from US buyers, including Blackstone, Cabot, Clarion Partners and Mirastar/KKR.
Joe Sinclair, associate director, investment at B8RE, commented on the results: “The North West industrial sector had a relatively stable H1 2024 in terms of pricing and performed well compared to other property sectors. Arguably, the biggest challenge of 2024 has been the lack of opportunities available to investors, stifling activity and the availability of comparable pricing. While investors have remained cautious, there remains a significant amount of capital continuing to back the industrial sector, with many investors highlighting the North West’s strong occupational market and future rental growth.”
Occupational market overview
B8RE’s report showcased the North West industrial occupational market experienced a slight increase in uptake in H1 2024 compared to 2023. However, with limited speculative development expected to commence in H2 2024, supply is anticipated to tighten further, particularly in prime locations.
The report’s findings displayed the H1 2024 take-up of big box units totalled 1.28 million ft2 across eight transactions, with expectations for improved take-up in H2 2024. Year-end take-up figures are predicted to be broadly in line with pre-Covid years, 2019/2020, at approximately 3-4 million ft2. Record headline new-build rentals continue to be achieved, with prime big box rentals now at £10 per ft2 and quoting rentals at £10.75 per ft2. In the multi-let industrial sector, rents up to £18 per ft2 have been achieved in Trafford Park (5,500 ft2).
Will Kenyon, industrial agent at B8RE commented: “While the figures for occupational demand have only shown a marginal increase in H1, we predict the year-end figures will see a further improvement. There is more than 1 million ft2 of space currently under offer, including several large – 300,000ft2 and over – requirements live in the market.”
