The region’s industrial and logistics property sector saw near-record levels of take-up in the first half of 2020, driven consumer demand for e-commerce amid the coronavirus lockdown, according to a report.
Take-up of large industrial units above 100,000 sq ft in the North West reached 2.64m sq ft in the six months to end of June, according to the latest Big Shed briefing by real estate consultancy Savills.
The figure marked the second best H1 ever recorded by Savills, with take-up levels rising 128% from the first half of 2019 and 56% above the long-term H1 average, and pushing the sector’s vacany rate down to a record low of 5.48%, the report said.
Approximately 30% of space transacted was for short-term leases of less than a year, as a result of market uncertainty caused by Covid-19.
However, there was also significant expansion undertaken by operators during the period, with shipping and freight company DSG accounting for 375,000 sq ft, cereal giant Kellogg committing to 525,000 sq ft at Bericote’s 525 Haydock, thought to be the region’s largest speculative industrial unit – and parcel courier Hermes taking 290,000 sq ft in two units in Warrington.
There were also space increases from e-commerce firms AO.com and Amazon, the report noted.
Due to the strong take-up levels, supply of warehouse space in the North West has decreased substantially in the last 12 months, falling to 4.24m sq ft from a peak of 7.26m sq ft in mid-2019. This equates to just 1.07 years of supply in the region, based on the five-year lease length average, Savills said.
Jonathan Atherton, industrial and logistics director at Savills Manchester, said: “The North West has seen a huge uptick in enquiries and subsequent transactional activity, with the market responding to the requirements brought about by Covid-19.
“We are continuing to track a significant volume of deals due to complete in the second half of the year, suggesting that the resilience of the market is set to continue. Given the wider global situation, this is hugely positive for the North West.”