Research article

East Midlands

Build to suit demand levels remain strong and in 2018 we expect grade A sites such as East Midlands Gateway and DIRFT III to absorb an increasing amount of these requirements

▲ East Midlands Gateway developed by Roxhill

Supply

■ The supply of existing units in the East Midlands currently stands at 4.83m sq ft across 23 units. Given a raft of speculative completions in 2017 supply reached a peak for recent times at 5.05m sq ft in the fourth quarter of 2017.

■ Of all the regions in the UK the East Midlands has the most diverse level of supply, both in terms of quality and size. For example, the region is unique in the fact that 72% of all supply is over 200,000 sq ft.

■ However, given the aforementioned speculative completions, Grade A supply, including modern second hand units, now stands at 3.53m sq ft, more than tripling, from just 0.79m sq ft at the start of 2016.

Figure 6

FIGURE 6Supply by grade

Source: Savills Research

Take-up

■ The East Midlands region has witnessed a relatively quiet year for transactional activity as take-up totals just 1.1 million sq ft. This is 66% below H1 16 and a 42% decrease from the long term average. We are aware of a number of units that are close to going under offer and some large scale occupiers seeking space before the end of 2017.

■ There were seven deals recorded in H1 2017 of which 71% were classified as grade A units. The largest unit transacted was a build-to-suit at Brackmills, Northampton where First Industrial is building a 256,029 sq ft unit for Stanley Black & Decker. Apart from this deal, all the other transactions in H1 2017 were between 100,000-200,000 sq ft.

■ Despite the strong speculative development in the region, there was only one speculative unit let in H1 2017 which was DVP 118 near Derby where TopHat, a modular housing manufacturer and developer, leased 118,000 sq ft. The manufacturing and automotive sector has been the driver of demand accounting for 75% of the units transacted.

Figure 7

FIGURE 7East Midlands take-up

Source: Savills Research

Development Pipeline

■ With 2016 being a relative fallow year for speculative announcements in the region 2017 saw development announcements rise to 1.00m sq ft.

■ This means that there is now 1.13m sq ft due for delivery in 2018 across five units with an average size of 226,000 sq ft.

■ Of the committed speculative development the majority of schemes are in Northern parts of the region, aside from C172 which Roxhill and Cabot are developing in Northampton.

Figure 8

FIGURE 8Supply timeseries

Source: Savills Research

Table 2

TABLE 2Key stats

 

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Simon Smith

Simon Smith

Senior Director
Research & Consultancy

Savills Two Exchange Square

+852 2842 4573

 

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