MIPIM 2016: The North West industrial market faces a severe shortage of grade-A stock by the end of 2016 despite the 2.2m sq ft of new space due to be delivered across 11 schemes this year.
Research from Savills reports that, although the North West has the second largest development pipeline of any UK region, it will not be enough to absorb even the average annual take-up of 3.4m sq ft.
This follows a record-breaking 2015 in which industrial take-up in the North West reached an all-time high of 4.5m sq ft.
Stuart Murray, industrial director at Savills, said: “If average take-up continues there simply won’t be sufficient supply even given the healthy development pipeline. The big questions now are where will the second tranche of new stock come from and who will the developers be?”
Although there is currently 5.7m sq ft of stock in the North West, 81% of this is classified as grade-B or grade-C, with much of the latter unsuitable for occupation. Already the shortage of grade-A space is driving a sharp rise in occupier demand for bespoke units, with build-to-suit deals accounting for 48% of take-up in 2015 compared to 18% in 2014.
Kevin Mofid, industrial research director at Savills, said: “A combination of constrained supply and increasing build costs have also driven the freehold value of industrial land up considerably and we expect this to continue throughout 2016.”
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