Why the Birmingham industrial market is going from strength to strength

COMMENT The growth of the industrial market over the past year has been nothing short of monumental.  The last 12 months have proven just how vital the logistics sector is to our everyday lives. From the increasing rise of online retail to Brexit-related border issues, to vaccine manufacturing and distribution, never has our sector had such a mainstream profile.  Taking a look at the Birmingham and West Midlands market in particular, last year saw record-breaking take-up in the region – 65% above what was seen in 2019. Encouragingly, demand came from a variety of sectors, with the standouts being online retailers and third-party logistics operators, together accounting for 29% of total take-up. When you consider that this is a region synonymous with the aerospace and automotive sectors – both of which, for obvious reasons, had challenging years – take-up from a growing number of alternative industries demonstrates the strong levels of demand for industrial space in the region.  Onward and upward As we progress through 2021, this demand has shown no sign of slowing down. Take-up for the West Midlands currently stands at 1.4m sq ft, a huge 40% above the same period last year. Supply stands at just 5.4m sq ft, of which only 33% is grade-A (the lowest level since 2015) and, at 6.9%, vacancy levels are now at their lowest since 2017.  So what is it about this market in particular that has been drawing in such a strong mix of occupiers? From a geographical perspective, you can’t get much more central than Birmingham and the West Midlands. Serviced by an excellent motorway network, the location can offer a significant strategic benefit when it comes to logistics and distribution. In addition, the region is home to a diverse skill base, and its globally-renowned automotive heritage sets it apart from other areas.  Yet, while it is clear that the market has enjoyed a prosperous year, the issue we now face is the shortage of available buildings. There is currently 900,000 sq ft of speculative development under way in the West Midlands, each building being below 200,000 sq ft. While this will relieve some supply constraints, the opportunities are limited when it comes to deals at the larger end of the scale, for which we are seeing increased interest. Logistics, logistics, logistics There are, however, some hugely exciting developments in the pipeline for the areas surrounding Birmingham city centre, which have the potential to bring best-in-class logistics facilities to the area. Having secured planning in 2019, Birmingham City Council and IM Properties are bringing forward Peddimore, an exceptional quality industrial development in Minworth. Prologis is set to also announce its intention to speculatively develop the remaining land at Hams Hall to cater for the increased occupier demand.  Savills is also providing development advice on the Birmingham Wheels site, a brownfield development site of approximately 50 acres, one-quarter of a mile to the east of Birmingham city centre. The site has been identified by the council as having significant potential to bring growth, investment and job generation to the surrounding area.  There are certainly exciting things to come for the region, with major requirements in the market and key schemes coming forward. Our focus now, however, must turn to replenishing the low stock of grade-A space.  Birmingham has been at the heart of the UK’s industrial industry for centuries – long may it continue. Charlie Spicer is director of industrial agency at Savills Birmingham Hear more from Charlie Spicer by watching EG’s Future of Birmingham production >> Image © High Level/Shutterstock