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Warehouse availability tightest in Northeast

14 March 2024

The UK’s northern regions have lower industrial availability rates than their Midlands and southern counterparts according to data from property analyst CoStar.

By Liza Helps Property Editor Logistics Matters

THE ALALYST notes that the Northeast availability rate of 4.3%, is largely due to a lack of new construction.

CoStar Group’s Senior Director of Market Analytics Grant Lonsdale said: “Although stock levels were recently boosted by the completion of Connect at Integra 61 which at 640,000 ft2 is the region’s biggest speculative project in over a decade, new starts have waned in recent months, reflecting high capital costs.”

It is a similar pattern in other regions, including the North West, Yorkshire and the Humber and Scotland, which have the next lowest availability rates in the north at 4.5%. Development starts across the three areas fell by around 40% in 2023 compared with the previous year. Scotland, in particular, has seen a dearth of industrial construction projects in recent times.

According to the availability data Wales has the lowest rates overall, however, this woud rise by a fifth with Wilko’s former 900,000 ft2 coming to the market.

Interestingly, London sits at the other end of the spectrum said Lonsdale: “Elevated levels of new construction have pushed up the capital’s available space, as developers such as Bridge Industrial and SEGRO have responded to an undersupply of large, modern units. This has coincided with older industrial properties being released back into the market as leases have expired.”

As to be expected though, he continued: “The story is not uniform across warehouse size brackets. For example, in London, availability is relatively high in the sub-50,000 ft2 and 100,000 ft2 to 250,000 ft2 size ranges, while tenants seeking upwards of 250,000 ft2 face a severe lack of options.”

This may be less of an issue in the Midlands, the East of England and the South West, where availability in the 250,000 ft2 to 500,000 ft2 bracket appears plentiful. Yet the make-up of availability is different across these regions.

The Midlands has around 11 million ft2 on the market in this larger bracket, spread across 14 existing and mostly modern warehouses plus nine under-construction properties. About 18% of the total is available via sublease as some occupiers have scaled back growth ambitions since pandemic tailwinds have subsided.

But the Midlands is not expected to suffer an extended period of oversupply. Local market participants report good tenant interest in both new and second-hand space, particularly within the Golden Triangle, thanks to its locational advantages.

In the East of England and the South West, larger availabilities are concentrated in fewer buildings. Availability is particularly concentrated in the latter, where the under-construction Panattoni Park Avonmouth, which has 1.2 million ft2 underway across two buildings, and Bristol 360 make up about half of the 3.4 million ft2 available for lease in the largest two size bands.