Network Space Broadheath p inform

The Broadheath scheme developed and now sold by Network Space was picked out as a good performer. Credit: via Infomr Comms

Big shed take-up hovers at 3m sq ft, sales hit £1bn

The region’s industrial investment market saw a slight contraction in 2024, while grade A space accounted for the majority of space taken in ‘big box’ market, according to reports from two consultancies.

According to Savills’ latest Big Shed Briefing, deals for industrial and logistics units of 100,000 sq ft+ declined by 23% year-on-year, with 3.09m sq ft let.

Savills said that a key factor here was reduced activity in smaller size bands (100,000 to 200,000 sq ft) across the region, compared to the long-term average.

However, despite the decrease in space transacted, Savills said that demand from occupiers for best-in-class, quality units remains strong across the board, with 83% of space transacted in 2024 being grade A.

Noting this flight to quality, Savills expects rental growth in the North West to outperform the rest of the UK. The current grade A quoting rent stands at £10.95/sq ft in the region, representing a 4% increase compared to 2023. Looking ahead, Savills baseline forecast predicts a 5.3% rental growth per annum over the next five years for the North West.

In terms of supply, the North West has a healthy level with 6.96m sq ft of vacant space currently available across 36 units, 36% of which consists of grade A space. There is also a robust development pipeline, with 12 units presently under development totalling 2.79m sq ft.

Jonathan Atherton, regional head of industrial and logistics at Savills, said: “Given the wider economic and political uncertainties that have impacted the UK over the past two years, coupled with the increased supply in more central regions attracting occupier interest, it is not surprising that the North West saw lower take-up levels in 2024.

“Looking ahead however, there is a strong pipeline of interest from a diverse range of occupiers for good quality industrial space in the region which, combined with the increase in supply for this type of space, should bode well for 2025.”

The 2024 report from B8 Real Estate leads on the investment market. B8RE said that the £1.03bn transacted across 63 deals makes for a total broadly in line with the five-year average.

Despite challenges, the firm said, “investor demand strengthened, particularly for prime assets, leading to notable acquisitions such as Premier Park and Broadheath Networkcentre.

“Traditional UK investors began returning cautiously, focusing on top-tier assets with strong ESG credentials. In the North West, institutional buyers such as ICG, Indurent and Mileway were active throughout the year, highlighting a continued focus on value-add opportunities.”

B8RE tallies up its big box numbers slightly differently to Savills, reporting take-up from 90,000 sq ft upwards, leading to a slightly higher figure of 3.22m q ft.

Both firms said the majority of space – around 80% as an average – taken was either speculative new-build or grade A, more than double the proportion of space rated as such in 2023’s deals, B8RE said.

John Burrows, investment director at B8RE, said: “The North West industrial sector had a relatively stable 2024 and it possibly provided the turning point in the investment market, with many investors in H2 particularly, noticing a window to strike at relatively attractive pricing levels.

“Overall, the biggest challenge of 2024 was the lack of opportunities stifling activity, the availability of comparable pricing and the lack of any core deals. However, pricing improved gradually, particularly on prime assets, with continued strong overseas investor demand coupled with the gradual return of some UK institutions.”

He added: “ESG credentials remain paramount for institutional investors with strong BREEAM and EPC ratings key to generating future demand and premium pricing. These are becoming paramount to investment decisions.”

Savills said that nationally, the big shed market trended up from 2023, hitting 27.97m sq ft, a modest rise of 1% compared with 2023 and 8% above the pre-Covid average.

From an occupier perspective, Savills figures show that, across the UK, manufacturing related occupiers remained the most active, accounting for 32% of take-up, with third party logistics the next busiest with 24%.

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