North West logistics space take-up is expected to be strong for 2018 despite a slow start to the year.
According to research by Cushman & Wakefield, the region’s slowest first half of the year since 2008 is expected to be followed by a “strong second half with improved rental growth in the big box market”.
The report says that, nationally, 6.3 million sq ft of logistics space was transacted between April and June this year, which is 32% down the year on year total and the uncertainty surrounding Brexit is suggested to be largely to blame.
Developers are said to be addressing the sector’s demand/supply imbalance through new construction, with the North West’s rise in Grade A availability since the beginning of the year among the sharpest at 52%.
Sam Royle of Cushman & Wakefield’s Manchester-based logistics and industrial team says: “Recent announcements by developers suggest that speculative completions in 2019 will remain sustained therefore increasing availability even though it is unlikely to match 2018 levels. Nonetheless, the market is far from oversupplied and new product will continue to put upwards pressure on rent levels.”
Here in the region Q2 take-up has reached just over 700,000 sq ft, taking the mid-year total to 1.25m sq ft, but despite subdued take-up levels the high rents achieved on a number of deals are said to be testament to the market’s underlying strength.
The research highlights that the North West’s continuing rise in availability has been driven by second hand stock returning to the market and an increase in development with 2.1m sq ft of space under construction across 12 buildings at the end of June.
Royle adds: “Despite a slow first half to the year we expect 2018 take-up to be strong. There are a number of units under offer and significant deals scheduled to complete that will fall into Q3. There are still a number of large requirements which remain unsatisfied and we predict a strong second half to the year with improved rental growth in the big box market.”