bdt incorporating Woodford & Co have produced figures for the 2017 industrial and warehouse market which show that take up fell from the 2016 figure of approximately 285,000 sq ft, to around 169,000 sq ft.
There were 34 deals transacted in total, but surprisingly only 3 of these exceeded 10,000 sq ft, which proved to be the difference between the two calendar years. Whilst there was a reduction in take up, supply statistics also fell, from 440,000 sq ft to 385,000 sq ft, part of which is thought to be a function of no new stock being constructed in the sector at present.
This agency Practice questions whether the lower take up figures, particular of larger units, are actually a result of there being limited opportunities in the supply sector, with only 3 units of over 20,000 sq ft currently available for immediate occupation, and with one of these poised to go under offer… or do the ‘stats’ reflect a slowing down in demand?
The answer is probably a compromise between both scenarios. With the economy running at a pretty decent level, many occupiers have expanded over the last few years, but via leases which have generally reflected longer periods of occupancy. Arguably there are fewer lease events, and companies therefore have less flexibility with their expansion opportunities. This affects levels of demand. In the supply chain, the cost of land is certainly no cheaper and building material costs are significantly higher nowadays. The inevitable knock on is caution and limited enthusiasm from developers when it comes to building speculatively. Kier Properties are poised to buck these circumstances however, having bought the old Macmillan Publishers site last year. The 1960s building has now been demolished to make way for a 108,000 sq ft brand new scheme comprising 3 mid range units, to be aimed at warehouse and logistics operators.