Northwest warehouse rents on rise

By Liza Helps Property Editor Logistics Matters

IN ITS BI-ANNUAL Northwest Industrial and Logistics report B8 Real Estate noted that prime Big Box rents achieved £9.50 ft2 – £10.00 ft2, a 20% annual increase from 2022 with rental levels across all new build size brackets over 90,000 ft2 up 15% year-on-year.

“While we predict further rental growth into 2024, we expect the rate to slow as supply levels return to a more normalised market. Prime quoting rents are now £10.50 per ft2.” 

This is despite big box take-up falling during 2022 by 43% on the five year average to what is considered more ‘normal’ pre-covid levels influenced by economic uncertainty and occupier caution.

Whilst overall take up was down, demand for second hand space was notably up from the year before, totalling 1.84 million ft2  equating to 68% of total take up, compared to 969,000 ft2  equating to 16% of total take up in 2022, factored by tight supply in prime locations and a number of units undergoing high quality refurbishments. 

Although total supply has increased from the 2.17 million ft2 recorded at the end of 2022, current supply levels are still below pre-covid figures, at 5.19 million ft2 at the end of 2019 equating to only 12 months of take up based on the five year average  of 4.75 million ft2.

With 895,000 ft2 currently under offer and a reduced pipeline, supply levels could get tighter by the end of the year.

Despite market uncertainty, development activity in the North West remains buoyant with 10 buildings under construction >90,000 sq ft, adding an additional 1.65 million ft2 of supply, due to complete in 2024. However, the majority of units under construction are in Grade B locations with only three units coming forward in more prime areas (Greater Manchester & Warrington), compared to five units in Merseyside. 

There are a further 24 buildings with detailed planning consent, able to deliver 6.06 million ft2 across the region. “But,” said B8 Real Estate, “We expect continued delays bringing much of this forward due to uncertainty in the funding market, meaning an oversupply is unlikely.”