The industrial market in the region has seen a significant shift towards higher-quality stock in the past 12 months, according to research by Savills, with only one-and-a-half years’ worth of Grade A stock left in the market.
Data from Savills’ Big Shed Briefing showed that 30% of available units across the North West were classed as Grade A in 2017, up from 15% in 2016. This equates to 1.75m sq ft, up from 990,000 sq ft.
Speaking to Place North West, Savills industrial director Jonathan Atherton said the changes were “reflective of demand in the market” with more funds recognising the need for high-quality industrial space.
“There is a lot of ageing stock in the North West and high demand from e-commerce occupiers which need better-quality buildings,” he said.
The increase in availability also reflected the fact that “a lot of occupiers can’t wait for design and build”, with more developers bringing speculative sheds to market to satisfy demand.
The largest speculative developments coming forward this year are a 375,000 sq ft unit at Logistics North near Bolton, which has started on site and will reach practical completion in November.
Omega in Warrington will also be home to a 360,000 sq ft unit by the end of the year.
Some of the largest requirements in the region are from e-commerce firms, with Boohoo on the hunt for 600,000 sq ft; while Amazon and L’Oreal are both understood to be looking for a similar requirement.
Demand for high-quality stock in the market is also reflected in the decrease in low quality stock, driven by refurbishments and stock being withdrawn from the market for alternative uses.
Savills’ data found there was now 960,000 sq ft of Grade C space in the market, down from 2.65m sq ft in the second quarter of 2016.
Atherton added there was still some lower-quality stock in the market that could be refurbished, typically those owned by supermarkets.
Overall take-up in the North West hit 2.7m sq ft in 2017, below the long-term annual average of 3.5m sq ft. However, there were 15 major deals in the year, in line with the long-term average, which Atherton said showed there was still churn in the market.