Off the back of a bumper year of transactions in the Midlands Logistics & Industrial market, leading to a supply and demand imbalance, there is no doubt that 2021 will be great for developers and investors.
Availability including buildings under speculative construction leaves around 10 months supply in the region. Whilst we are expecting some of the buildings taken on short-term basis to come back to the market, this very much depends on how long the pandemic continues for into the year. Retail failures are likely to have an impact on the supply of second hand accommodation. The good quality space with usable fit out is likely to be attractive to occupiers and won’t hang around for long.
The rise of ecommerce has been one of the fundamental drivers of demand for warehouse space over the past five years, and this trend is only going to accelerate as consumer behaviour continues to shift in favour of online purchasing, as many have grown accustomed to over the past year.
Whilst we do not expect 2021 to record a similar amount of take up as the past 12 months, we do predict further rental growth across the market with the gap between modern, existing and new closing further.
Speculative development should continue, and those that paused due to the pandemic will revisit appraisals factoring in the significant yield compression experienced over the last 12 months.
Success in the property market is all about location, location, location, however in a rapidly maturing sector there is so much more to consider (supply vs demand, access to labour, power availability…) when deciding where to invest large amounts of capital. The past year has solidified the Midlands Logistics & Industrial market as a major target for occupiers and investors alike, a relationship promising great things for both for years to come.