20220512-莱坊-LOGIC_Midlands_Q1_2022_5页_1018kb

Midlands Industrial Market Analysis: Q1 2022 Summary

Knight Frank's Q1 2022 research highlights a severe shortage of available industrial space in the Midlands, particularly in large units (500,000 sq ft+), with vacancy rates plummeting to an acute record low of 1.5% for properties exceeding 50,000 sq ft. This scarcity has fueled a 25% annual growth in prime rents, driven by robust demand and speculation.

Market Dynamics:

• Occupier Activity: 3.6 million sq ft occupied Q1 2022, slightly lower than the prior year but significantly higher than the 5-year annual average. Distribution remains the most active sector, accounting for ~86% of Q1 take-up and ~65% over the last four quarters.
• Pre-Let/Speculative Development: 35% of Q1 take-up via pre-lets or speculative builds. Speculative construction is near record highs (6.6 million sq ft under construction), with vacancy rates for large units critically low.
• Rent Projections: Expected further rent increases this year (8.7% West Midlands, 9% East Midlands, 8.4% Birmingham). Prime rents in Birmingham now £10.00 psf (up 25% YoY).

Investment Growth:

• Q1 2022 industrial investment reached £844 million (14% YoY). Total investment over 12 months to March 2022 reached £3.8 billion.
• Weighted average yield on investment assets was 4.9%, suggesting strong investor confidence. Average property size over 500,000 sq ft was £25 million.
• Investors showed strong returns amidst high demand and rental growth. Purchasers were led by overseas investors, UK institutional investors, and private investors.

Key Features:

• Short Supply: Driving rent increases and speculation; specific scarcity in the largest unit sizes.
• Distribution Dominance: Heavy reliance on distribution tenants.
• Strong Financial Performance: Positive rental growth and investment yields support market confidence.

The overall outlook suggests continued supply-demand tension driving growth in both occupancy and investment activity across the Midlands industrial market in 2022.