Pictured above: Simon Lloyd, Head of Industrial &
Logistics at DTZ
The availability of grade A industrial space continued to fall
in the last quarter of 2010 driven largely by demand from occupiers
consolidating their operations, according to DTZ Research's latest
UK Property Times Industrial market report.
The report concluded that in most UK locations, falling levels
of availability combined with a lack of speculative development was
creating competition for prime space.
Martin Davis, Head of UK Research at DTZ, said "With downward
pressure now on incentives, the prospect is for the industrial
market coming more into balance in 2011, particularly at the prime
end".
Overall take-up in Q4 was slightly down from the previous
quarter, at 5.8 million sq ft, with availability of prime space
falling to 37 million sq ft. Transactions were dominated by
retailers and third party logistics operators who together
accounted for 91 per cent of all take-up.
Consolidation was the key driving force behind activity in Q4 as
retailers sought to rationalise their distribution hubs, often into
a single, centrally located unit. This trend was particularly
evident in the North West, which saw the largest volume of
transactions, with further demand anticipated in 2011. Despite
output growth in the manufacturing sector during the quarter, this
did not translate into demand for industrial space, with its share
of transaction volume falling to 9 per cent.
The report observes that decreasing supply and continuing demand
for prime space are indications that the market is recovering,
although demand is still well below historical norms.
In the West Midlands, no grade A transactions were completed in
the final quarter of 2010 but despite this overall take-up remained
solid at 990,000 sq ft, reaching 6.9 million sq ft for the year.
Activity was dominated by third party distributors who accounted
for half of all lettings. The region was also provided with a
welcome boost as Land Rover announced they were staying in the
market.
Simon Lloyd, Head of Industrial & Logistics, commented:
"Limited take-up in the West Midlands was due to decreased
availability resulting in less choice for potential occupiers.
However, since the start of the year enquiry levels have picked up
and we are anticipating greater levels of take-up in the region
this year."