The logistics/industrial property market overview report provides an analysis of market conditions in June 2019. It finds that the sub-20,000 sq ft market has limited availability and a vacancy rate of around 3%, while the mid-box and big-box markets have seen pause in activity. Take-up levels have remained strong in recent years, particularly for units of 100,000-200,000 sq ft. Rental rates are stable but yields are expected to increase slightly due to weaker demand for new mid-box development and longer voids. Overall the big shed sector remains in high demand from investors seeking safe commercial property investments.

1. Logistics/Industrial Market Overview
June 2019

2. The Marketplace
June 2019
- Sub 20,000 sq ft market
- Limited availability
- Vacancy rate c.3%
- Mid Box
- New build mid box – 10 year term certain – several voids over 24 months
- Second hand mid box – 5 years term certain
- Big Box – over 100,000 sq ft
- Enquiry levels strong especially in the 100,000 – 200,000 sq ft size range
- The number of Grade A second hand units are coming to the market has increased.
- The mid and big box market has paused

3. Regional Ten Year Take Up
June 2019
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
3.1
4.2
3.8
4 4
2.9
4
3.9
1.6
3.3
msqft
Take Up 2009 - 2018

4. Regional Take Up 2017 – 2019
June 2019
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2017 2018 2019
Total Take Up 2017 - 2019

5. Regional Supply
June 2019
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
100 -199 200 -299 300 -399 400 - 499 500 -599
Sqft
Unit Sizes
Current Supply June 2019
U/C
Spec
Existing
Total

6. North West Rental Levels
June 2019
Rent (psf)
New Build 100,000 sq ft plus £6.25 - £6.75
2nd Hand 100,000 sq ft plus £5.25 - £5.75
New Build 20,000 – 50,000 sq ft £6.50 - £8.00
New Build 10,000 – 20,000 sq ft £6.95 - £8.00

7. Automation/Robotics
June 2019
- Main Factors – Internet and labour supply
- Labour
- Lowest unemployment rate since mid 1970s
- Increasing wage growth and reduction in cost of automation
- Cheaper locations/availability of labour must offset additional transport costs
- Damage to goods reduced by automation
- Internet
- Amazon has taken 20% of large unit take up - not all prime locations
- 14% increase in employees in this sector since 2013
- Pick and Dispatch – automate
- Product returns – labour intensive, part automate

8. Automation/Robotics - Issues
June 2019
- Building Heights
- Traditionally 10 m – 15 m to haunch
- Now 15m – 22 m to haunch
- Power
- Increased power consumption
- Electric vehicles
- Automation and IT
- Building Footprint
- Greater height/smaller footprint
- Multi- storey parking for staff and delivery vehicles

9. Mid Box
June 2019
Availability – New Build Sq Ft No of Units
25,000 – 50,000 392,456 12
50,000 – 70,000 448,052 8
70,000 – 90,000 318,700 4

10. Existing Stock/Yields
June 2019
- Vacancy rates are low c 3%
- Major issue in the SME/sub 20,000 sq ft market – creating illiquidity
- New development - sub 20,000 sq. ft difficult to address due to viability
- Mid Box - demand is strong for second hand
- Big Shed – pre recession units 300,000 – 500,000 sq. ft available
- Investment Market – institutional locations strong/secondary weaker
- Yield range 4.5% - 6% prime big shed
5% - 6% - sub £5m lot size

11. Land Supply/Development - GMSF
June 2019
- Main Issues
- Timescale to obtain planning permission/call in.
- Take up – ie Logistics North
- Main Areas
- North Manchester - M60 Pilsworth/Heywood/Rochdale
- Bolton – Wingates - M61 J6
- Wigan – M6 J25
- Bredbury – M60 J28
- Warrington – Stretton – M6/M56
- St Helens – Parkside and Haydock – M6 J22/23
- Crewe, Radway Green – M6 J16

12. Conclusions
June 2019
- Big Sheds – strong market
- Mid Box – weaker market – longer voids on new build flexibility on existing
- SME – strong market but local covenants
- Low vacancy rate c3%
- Difficult to develop due to viability
- Land Supply – positive but timescale for delivery an issue
- Rents – will start to increase at a slower rate
- Yields – strong investment market due to demand and focus on ‘safe’
sectors