Why 92M SF Is A Number To Remember For West Mids Warehousing
Take-up of logistics floorspace in the West Midlands in the first nine months of this year is 75% up on last year, whilst the supply of floorspace is holding roughly steady.
More staggering still, take-up in Q3 was a full 335% up on Q2’s regional figure.
The latest industrial market data dump from Cushman & Wakefield showed West Midlands take-up in Q3 reached 2.4M SF, with take-up of 3.6M SF over the first nine months of 2020.
But the data suggests that unlike some other regions, the West Midlands remains relatively well-supplied. Total supply is 4% up year-on-year, although down 16% on the market peak.
The regional data comes as Knight Frank released predictions that e-commerce will stimulate demand for up to 92M SF of new UK warehouse space in the next three years.
Analysis from Knight Frank shows every billion pounds of online spend requires 1.36M SF of new logistics floorspace.
The Knight Frank analysis suggested that the spike in online sales in 2020 alone will create demand for an additional 30M SF of space, rising to a total of 92M SF by 2024 by which time online sales will account for 32% of UK retail spend. The grocery sector will lead the way, said Knight Frank, creating demand for 7.1M SF of new floorspace.
The research confirms trends identified by Cushman & Wakefield that said 40% of the 16M SF nationwide take-up in Q3 2020 was from e-commerce occupiers. Amazon’s expansion, including a single 2.3M SF letting at Panattoni Park in Swindon, saw the retailer sign the largest deal of Q3 and account for one-third of all 2020 take-up so far, a total of 11.5M SF.
“Speculative development has slowed, which means this imbalance could persist. There are signs that prime rental growth could return as a result, particularly for mid-box units,” Cushman & Wakefield Head of UK Logistics Richard Evans said.
“Supply is already very constrained in and around London and major cities, with the availability of land a major challenge for developers. As online sales accelerate, we may see new industrial formats emerge as supply chains adapt,” Knight Frank Head of Logistics Charles Binks said.
