The West Midlands distribution market has experienced an active 2011 with a strong level of take-up considering market conditions. Demand has been positive for both existing buildings and design and build opportunities, and this has typically focused on prime distribution locations such as the M6, M42 and A38 Corridors.
Limited availability of prime space
Overall availability of new high quality space has fallen throughout the year as supply of both prime and good quality second-hand properties continues to be limited. Occupiers have on occasions, had no alternative other than to resort to build to suit solutions to satisfy demand. Internet retail and in particular, the automotive sector, has been the main drivers for requirements in the region throughout 2011.
Staffordshire remains most active area in the region
As with 2010, Staffordshire has once again been the best performing location within the West Midlands region (comprising Staffordshire, Warwickshire, Worcestershire and Shropshire) and the largest letting (Amazon's acquisition of G Park, Rugeley) has again taken place here (the largest deal transacted in 2010 was our acquisition of Opus Axis in Burton on Trent comprising 466,745 sq ft on behalf of Boots). Occupiers have once again chosen Staffordshire as their preferred location as there is a good supply of buildings, albeit this is rapidly decreasing. Competitive terms have also been made available to occupiers which, when combined with a good supply of labour and the regions strong communication links, has made the area very attractive and the most active for the last two years.
Limited options for occupiers seeking new and refurbished units
There are now only 11 new build warehouses left on the market above 100,000 sq ft in the region totalling approximately 2,452,053 sq ft. However, several of these units are under offer and with average take-up in this particular section of the market totalling 2.5m sq ft a year, occupiers will have limited and restricted opportunities in 2012. There is now less than a year’s worth of modern warehouse space in the region and a return to speculative development is urgently required.
Oven ready design and build to dominate large scale take-up in 2012
However, this is unlikely to return in 2012 due to the uncertain nature of the economic climate and lack of appetite from financial institutions. "Oven Ready" design and build sites which can accommodate pre-let requirements are subsequently likely to dominate large scale take-up this year.