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News Release

West Midlands has retained its place as the location of choice for major shed occupiers

According to Jones Lang LaSalle research


Birmingham, 9th November 2011 – The West Midlands has retained its place as the location of choice for major shed occupiers, according to the latest survey of the UK¹s industrial market by Jones Lang LaSalle.
 
Its new Big Box Research Report has replaced King Sturge's Industrial & Logistics Market research, following the merger of the two agencies iearlier this year. 
 
Both highly regarded industrial leasing teams, last year their combined efforts accounted for just over 50% of all nationwide transactions over 100,000 sq ft.
 
The analysis, which focuses on the 100,000 sq ft-plus sector for prime space, pulls no punches in its overview and its forecasts, which Jones Lang LaSalle's Birmingham-based industrial director, Cameron Mitchell, believes is critical.
 
“There is absolutely no merit in trying to talk up a market based on nothing more substantial than optimism and wishful thinking.  This report is based on hard data, crunching the numbers, and seeing where the analysis leads,” he said.
 
“The report shows that some regions have really struggled during the first nine months of 2011, but for the West Midlands it makes very good reading.
 
“We were the top-performing region in the first half - accounting for 27% of all industrial floor-space taken up in the country."
 
Amazon¹s decision to take Gazeley’s 700,000 sq ft Flair building at Rugeley helped the West Midlands to the top slot, but Cameron points out that a raft of other significant deals were also completed in Q1 and Q2.
 
“Amazon’s letting deservedly made the headlines, but there were also seven other deals involving sheds of between 100,000 sq ft and 250,000 sq ft,” he said.
 
“Only one big box transaction completed in Q3, when Plastic Omnium Automotive took 121,000 sq ft at Hams Hall, but that doesn¹t mean the market slowed because deals accounting for almost 500,000 sq ft went under offer, and are likely to complete before the year-end.”
 
The report says the ‘Golden Triangle’ in the Midlands remains the national hot-spot for industrial and logistics occupiers, and concludes that the location of Bbig boxes is still closely tied to the motorway network.
 
Cameron¹s colleague, industrial director Carl Durrant, doesn’t see that changing - in the short or medium-term.
 
“Occupiers may continue to complain about traffic levels, especially on the M6, but the overwhelming majority still moves their freight by road, and still prefer to have locations near motorways, ² he admitted.
 
“If you look at big box lettings this year, with which we were involved, Norbert Dentressangle took just over 140,000 sq ft at Tamworth’s Centurion Park, and Europa Worldwide Logistics signed a pre-let for 155,000 sq ft at ProLogis¹ Midpoint Park.
 
“Clearly, the quality of the space and the lease terms were important in their decisions, but the most important influence was good access to motorways.
 
“Even if you look at space which hasn¹t yet been let, the highest level of inquiries comes in for units near motorway junctions, such as Goodman¹s 323,000 sq ft Citadel scheme, at Wolverhampton, which is two miles from the M6, and six from the M5."
 
However, Carl believes some occupiers are starting to change their mindset with regard to rail-linked locations.
 
“A few years ago, railheads were a trendy option for developers because of the environmental benefits of switching freight from road to rail, but they weren¹t used as much as had been predicted,² he said.
 
“However, we are now seeing more inquiries about such locations, and this time it¹s because of the financial benefits, more than because of ¹green¹ strategies.
 
“We’re also having increasing interest in space for internet-based logistics operators, and from companies looking to take advantage of the fast-growing container traffic coming through East Coast ports.
 
“However, there is no sign of spec space returning to the market, because of the wider economic uncertainty, and as each big box deal takes another chunk out of the dwindling supply of Grade A space, the trend for ¹build to suit¹ developments will continue."
 
Looking into 2012, Cameron is confident that the region will remain a hot-spot for significant industrial lettings, not least because of recent announcements by Jaguar Land Rover. (JLR)
 
“The new £355 million Jaguar plant on the i54 site just outside Wolverhampton, and increased output at both the Lode Lane and Castle Bromwich plants, will give a tremendous boost to JLR's supply chains, and therefore to the property market,” he said.
 
“Demand will increase from manufacturers looking to expand existing premises, and for new suppliers looking for sites in this region because of the pressures of ‘just-in-time’. Every time sales rise for Jaguars and Range Rovers, it¹s good news for the industrial and logistics sector.”