The North West industrial real estate market has had another exceptional first half of 2022, according to specialist agents B8 Real Estate.
In the first six months, the region saw over half a billion pounds of completed investment deals, while rentals of large units rose by a quarter.
Its latest market update shows 39 investment deals worth a total of £505m closed in the six months, down 26% from last year’s record first half, but still 24% above the five-year average.
Well over a fifth of all investment (£110m) was for speculative developments, with investor appetite for such projects hitting an all-time high in the early months of the year.
Meanwhile, rentals of “big box” units — over 90,000 square feet — totaled 4.19 million square feet, up 25% from the same time last year.
With only two speculative new homes immediately available, supply still fails to keep up with demand, which continues to drive up rents.
Smaller units have also seen record rent growth, with rents for second-hand units edging slightly closer to those for new construction due to the lack of supply. Land values continued to rise, reaching over £2 million per acre in the most desirable locations.
Key investment deals in the first half included the sale of Artis Park, Winsford, to the Albert Gubay Charitable Foundation for over £22m; the acquisition of Southside Bredbury by Mileway for £10 million; the £101 million investment by Frasers Logistics & Commercial Trust to finance a new Peugeot distribution center at Ellesmere Port; and the £19 million acquisition of Rhodes Business Park in Middleton by Oxenwood.
Simon Wood, of B8 Real Estate’s investment team, said: “Despite economic headwinds and the ongoing war in Ukraine, the industrial property market continued to perform well, both in terms of trades than prices received.While the market has eased significantly in recent weeks, prices remain well above historical levels.
“A key trend is the growing importance of ESG issues, particularly from institutional investors, but also from users. Building owners and developers should also pay close attention to EPC levels, BREEAM and other initiatives, if they want to guarantee premium prices and strong demand in the future.
Key business transactions during the period include that of an 878,000 square foot unit at Omega’s Warrington site in Home Bargains; a 505,000 square foot unit at Omega to Iceland Foods; and a 393,000 square foot unit at the NHS Supply Chain in Widnes.
Jon Thorne, of the lettings team, said: “While some occupiers have suspended their requirements to assess the economic climate, we believe business demand is still quite deep and we expect occupancy demand to remain strong in the future. second half, with a total in 2022 still well ahead of the five-year average.
“While viability issues may slow the delivery of speculative developments, this means that supply will remain constrained, which will help maintain continued rental growth.”
He added: “Despite the threat of an economic slowdown, we believe the industrial sector will remain resilient as it is supported by structural changes – such as the growth of online retail, increased stocking of products in the UK to protect supply chains, and relocation of manufacturing, which should ensure continued business growth in the months and years to come.