The West Midlands industrial sector stands firm against prevailing headwinds, projecting robust rental growth in the face of economic uncertainties, asserts Savills in its latest Big Shed Briefing.
Forecasting a resilient 4.8% annual rental growth over the next five years, Savills underscores the region’s steadfastness in the industrial market for units exceeding 100,000 ft2. Despite initial supply surges in early 2023, supply levels have stabilised with 27 units, totalling 6.04 million ft2, currently available in the West Midlands. Notably, the region witnesses a scarcity of units exceeding 450,000 ft2.
Ranjit Gill, Savills Birmingham’s Industrial and Logistics Director, remarks: “The resurgence of occupier interest in 2023, amidst prolonged decision-making cycles, cements the West Midlands’ stature as a logistics and manufacturing nucleus. Prime rents remain unwavering, defying market volatilities, and we anticipate this upward trajectory to persist.”
Of the available stock, 25% comprises Grade A speculative developments, 45% Grade A second-hand spaces, 20% Grade B, and 10% Grade C spaces. Despite heightened supply, the vacancy rate maintains equilibrium with a 5.98% long-term average, representing 0.94 years’ worth of supply based on the five-year annual average take-up.
In 2023, the region witnessed a 23% decline in take-up, reaching 3.68m ft2 across 19 transactions, attributed partially to the scarcity of large units. Economic constraints have steered occupiers away from build-to-suit ventures, with only 26% of transacted spaces tailored to specific needs, compared to 47% in 2022. Speculative developments accounted for 15%, while second-hand spaces constituted 59% of transactions.
The report highlights a diverse array of occupiers in the West Midlands, with manufacturers leading at 33% of all transactions, followed by 3PLs at 25% and grocery retailers at 18%.
Peering into the future, the West Midlands boasts a promising development pipeline, with 14 units under construction, totalling 2.89m ft2 across various size bands.
Christian Smith, also an Industrial and Logistics Director at Savills Birmingham, affirms: “Our latest briefing unveils a resilient industrial landscape in the West Midlands, with anticipated rental growth driving economic expansion in the foreseeable future.”
