Industrial space demand in the southern M1 region is at an all-time high – Bidwells’ latest research reveals – defying recent economic warnings of an impending slowdown in the star-performing industrial and logistics property market.
Demand for industrial floor space reached 8.7m sq ft in the first half of 2018 - the highest level recorded in the 15 years Bidwells has been collecting data for this region - with more than 30 requirements for units of 100,000 sq ft and above registered with the property consultancy.
The record figures follow the warning from independent economic researchers, Capital Economics, earlier this month, that rental values in the industrial sector are “starting to fade”.
Bidwells which looks at the industrial market twice yearly, found that prime rents in M1 South are at £8.25 per sq ft, up 1.3% in a year and up 32% since the end of 2013.
Paul Davies, Partner, Business Space Agency at Bidwells, said:
“The debate about whether the industrial sector is overheating will run and run, I’m sure, but the fundamentals of the market in the M1 South region are strong. Based on old principles, the market may look fully priced, but we are in a new era and the distribution market is being driven by different influences and occupiers.”
“Gazeley has just completed a 574,250 sq ft distribution unit (Altitude) on a speculative basis, proof, if you need it, that the M1 South region remains one of the most attractive regions of the UK for investors and developers.
“We are not suggesting this current growth cycle will continue everywhere, forever, but the M1 South market should continue to see growth over the next 12 to 18 months. The market is looking robust and there is certainly further for it to go.”
Other key findings of Bidwells latest research include:
- Prime rents in Northampton have increased to £7.25 per sq ft, 12% below comparable rents in Milton Keynes
- The region’s availability rate has risen to 6.0%, its highest level in four years, primarily due to the completion of Altitude (575,000 sq ft)
- There has been an Increase in grade A supply in Milton Keynes of 118% following the completion of Altitude
- The largest transaction in Milton Keynes in 2018 H1 was the 93,700 sq ft letting of The Cube, Brinklow to Mercedes Benz
Capital Economics research entitled ‘Industrial upswing starts to slow’ can be found here .