solar new, CBRE, p SEC Newgate

John K Philips' 120,000 sq ft deal in Warrington was one of Q3's highlights. Credit: via SEC Newgate

Cautious occupiers cause North West shed market to cool 

Take-up of industrial units larger than 50,000 sq ft is 60% lower today than the same period last year, according to research by Knight Frank. 

Red hot in the wake of the pandemic, the North West’s shed market has cooled this year as occupiers take a more cautious approach to deals amid “economic pressures”, the report states. 

Despite a general reduction in take-up levels and a slowdown in enquiries, several large deals completed in the third quarter of 2023. 

These include Stapleton Tyres John K Phillips signing for a combined 377,000 sq ft in Warrington. 

However, overall take-up for the year is expected to be around half that seen in 2021, when the market was at its hottest and 8m sq ft of deals were signed. 

Vacancy rates across the sector were up slightly on the previous quarter – from 3.8% to 4.6% – thanks to the completion of a handful of projects delivering 1.5m sq ft of new stock to the market. But Knight Frank’s report warned that development activity is slowing due to “increased build and financing costs”. 

Around 1.5m sq ft of speculative large sheds is currently under construction, down 46% year-on-year. 

This slowdown is driving rents upwards; the cost of leasing industrial space in the North West has increased 19% in the last 12 months, according to Knight Frank. 

“Similar to the nationwide picture with inflationary pressures and wider economic uncertainty, the North West occupational market is taking a much more cautious approach when it comes to leasing warehouse space,” said Sam Royle, partner in Knight Frank’s industrial and logistics team. 

“We are experiencing extended decision-making and a general slowdown in transactions. Whilst the volume of transactions has dropped in comparison to the two or three years, take-up figures are falling back to pre-pandemic levels.” 

While the North West’s occupier market is struggling to reach the heights of previous years, investment deals are holding firm.

In the first nine months of 2023, £1.1bn of industrial space has been traded, which is 32% higher than the same period in 2022. Just less than half of this amount came in a single transaction: Blackstone’s £480m acquisition of the Harbert Portfolio.

Your Comments

Read our comments policy

Related Articles

Sign up to receive the Place Daily Briefing

Join more than 13,000 property professionals and receive your free daily round-up of built environment news direct to your inbox


Join more than 13,000 property professionals and sign up to receive your free daily round-up of built environment news direct to your inbox.

By subscribing, you are agreeing to our Terms & Conditions and Privacy Policy.

"*" indicates required fields

Your Job Field*
Other regional Publications - select below