The manufacturing sector has increased its share of big shed take-up during the first half of 2017 says new research from leading real estate adviser GVA.
The latest Industrial Intelligence report from GVA says that this was particularly evident in the automotive market, with deals to the likes of Michelin, Aston Martin and Jaguar Land Rover increasing the share of manufacturing activity to 28%.
Meanwhile, online retail giant Amazon committed to 2.3 million sq ft of space – 20% of big shed take-up during the first half of 2017.
Even so, the share of retailing demand was down on last year bringing overall take-up of modern distribution units over 100,000 sq ft during H1 2017 to 11 million sq ft, just below the five year average.
Almost half of the big shed take-up during the period was concentrated in the Midlands – continuing the region’s dominance in the marketplace.
Commenting on the report, David Willmer, Senior Director of Industrial at GVA says: "General demand levels for big sheds remain robust with a number of enquiries for existing units, design and build and land acquisitions on-going, particularly from etailers, retailers and manufacturing companies.
"Levels of take-up are expected to be stronger for the second half of the year, with some very large requirements expected to sign."
2016 peak in speculative development cycle increases supply
Existing supply of big sheds remains constrained but has increased over the past year as 2016 saw the highest level of speculative completions in the current cycle.
A number of modern second-hand units returning to the market have also helped ease supply levels, to one-and-a-third years' supply nationally, based on average annual take-up.
According to GVA's report the speculative development cycle peaked at 5 million sq ft during the first half of 2016.
Reduced institutional funding risk and the industry's ability to provide design and build solutions more quickly has meant the level of speculative development remains active but slowed to 3.3 million sq ft during the first half of this year.
Willmer added: "Demand for development sites is still strong in the main from both developers and many investors. Robust capital value and rental value growth continues to keep development viability healthy. However we do expect the recent easing off in speculative development activity to continue into next year."