20230119-莱坊-LOGIC_Midlands_2022_Review_5页_631kb

Occupier and Investment Market Trends in the Midlands Logistics and Industrial Sector

Market Overview (2022)

• Industrial Market Take-up: Occupier demand in the Midlands industrial sector reached a record 15 million square feet in 2022, down 33% from 2021's 22.3 million sqft, but still robust. Demand heavily favored new, high-quality space suitable for modern needs and ESG goals.

• Supply Conditions: The end-of-year vacancy rate stood at 2.4%, the lowest in a decade (down from 2.8% in 2021). This improvement resulted from significant new completions, primarily second-hand units which remain dominant (74%) and often unsuitable. There is still a substantial gap between supply and demand, with only about ten months' worth of immediately available space compared to demand requirements, especially for large, high-quality speculative units.

• Prime Rents: Prime rents for units over 50,000 sqft in Birmingham/Birmingham Airport increased by 29% to £11 per square foot (psf) due to strong demand for specific, higher-quality building types (pre-lease, build-to-suit).

• Dominant Sector: The logistics sector continued its dominance in the occupier market, accounting for 69% of activity (up from 62% in 2021). Major deals supported this trend.

Investment Activity (2022)

• Total Investment: Investment volume totaled £2.4 billion, a 36% decrease from the record £4.1 billion in 2021, yet still 3% above the five-year average. Sentiment cooled towards the year's end.

• Investor Mix: Overseas investors accounted for 39% of the investment, followed by UK institutional investors (24%). Average plot size was £20.2 million.

• Deal Highlights: A notable distribution/major retail deal involved £98.35 million secured by Railpen for Sainsbury's. Other prominent transactions include purchases by BentallGreenOak, M7 Real Estate, BOREAL, AIMCo/Canmoor, and Canada Life.

2023 Outlook

• Forecasts anticipate continued rental growth (originally estimated at 3.6% for East Midlands, 3.8% for West Midlands by RealFor).
• However, rising operational and development costs due to inflation are expected to encourage cost-conscious behavior among tenants and potentially delay new development plans.
• The significant supply deficit is viewed as a key driver for rental growth in 2023.