Colliers: New shed space to run out within nine months

Quality logistics space of units in excess of 100,000 sq ft will run out in the North West in early 2016, the surveyor said in newly published research.

Julien Kenny-Levick, director, industrial and logistics at the Manchester office of Colliers International, said: "While new stock is feeding through with developers on site to build speculatively and others seeking funders so they can start work, the amount of available and ready to occupy space needs to be much more to meet demand.

"The state of the market therefore remains worrying and quite stark for potential occupiers and there's little evidence of the picture changing markedly in the next nine months."

At the end of the first quarter of 2015, there was an overall total – of old and new space combined – of 9.9m sq ft of large industrial accommodation, down from 10.1m sq ft in the second half of 2014.

The amount of large new space within the overall total for the North West is 856,707 sq ft, down from 1.3m sq ft a year ago, and equating to approximately nine months of supply for the region, Colliers said.

Kenny-Levick added: "Throughout the past five years in the North West and elsewhere in the UK we have seen little new development within the big shed arena and most of the deals have been secondary stock.

"While speculative and pre-lets are returning to the market, most occupiers' requirements within key and growing sectors such as automotive and the multinational food and retail sectors aren't being adequately met. What we are seeing instead is existing stock being retrofitted and adapted to satisfy operational needs as with B&M's deal for the 350,000 sq ft Onxy 350 distribution centre at Runcorn, Cheshire.

"We have seen the balance of power move from the occupier to the developer because of the lack of existing good quality stock. Rents have started to show signs of moving upwards with incentive packages being compressed."