A study by B8 Real Estate found that the amount of space let in the North West in the first half of 2022 was 25% higher than the same period last year, while the overall value of investment deals for the period was down year-on-year.
A total of £505m changed hands across 39 investment deals in the first six months of 2022, according to B8RE.
This reflects a 26% decrease compared to the same period in 2021. However, this figure is still 24% above the five-year average.
Key investment deals in the first half included the sale of Artis Park in Winsford to The Albert Gubay Charitable Foundation for more than £22m and the £101m investment by Frasers Logistics & Commercial Trust to fund a new Peugeot distribution centre in Ellesmere Port.
More than a fifth of all investment deals were for speculative developments, according to B8RE.
“Despite the economic headwinds and the ongoing war in Ukraine, the industrial property market has continued to perform strongly, both in terms of trading volumes and pricing achieved,” said Simon Wood, director in of B8 Real Estate’s investment team.
“Whilst the market has noticeably softened in recent weeks, prices remain well above historical levels. A key trend is the growing importance of ESG issues, particularly from institutional investors but also from occupiers.”
He added: “Building owners and developers need to give serious consideration to EPC levels, BREEAM and other initiatives to if they want to ensure premium pricing and strong demand in the future.”
In terms of lettings, activity was up year-on-year. Deals on units larger than 90,000 sq ft totalled 4.19m sq ft, a 25% jump compared to 2021, B8RE’s report states.
Big deals in the quarter included two at Omega in Warrington. Home Bargains signed for an 878,000 sq ft unit, while Iceland Foods took a 505,000 sq ft shed.
Jon Thorne, director in B8RE’s lettings team, said: “While some occupiers have put their requirements on hold to assess the economic climate, we believe there is still good depth in occupational demand and expect take-up to remain strong in the second half, with total take-up in 2022 still well ahead of the five-year average.
“Although viability issues may slow the delivery of speculative development, this means that supply will remain constrained which will help maintain continued rental growth. Despite the threat of an economic slowdown, we believe that the industrial sector will remain resilient as it is underpinned by structural changes – such as the growth of online retailing, increased storage of products in the UK to protect supply chains and onshoring of manufacturing which should ensure continued growth in activity in the months and years ahead.”
Rents and values
Demand is outstripping supply, which is pushing rents upwards across the board.
Rents on second-hand units are edging closer to those of new builds due to lack of supply, according to B8RE.
Land values have continued to increase, exceeding £2m an acre in the most sought-after locations.