The North West’s industrial and logistics market has returned to growth – and a new report suggests a limited big box development pipeline means there will be “competitive tensions” and rising rents.
The North West Logic report from Knight Frank showed the market was positive again in 2024 after two years of decline. Occupier take-up reached 4.8million sq ft, up 7.5% on 2023 and surpassing the five-year pre-pandemic average.
The study showed manufacturing had a strong year, with a 71% year-on-year increase in take-up from the sector meaning manufacturing made up 39% of total take-up. Meanwhile, retail and distribution sectors accounted for 26% and 28% of take-up respectively.
Prime rents hit £11.50 per sq ft, with prime annual rental growth of 15%. Knight Frank is expecting more growth this year, with prime rents forecast to rise by 4.5% across the North West and 5.7% in Manchester. Key deals included the letting of Oldham 369, a 369,251 speculative new build, to food firm Inspired Global Cuisine.
Sam Royle, partner, Manchester logistics & industrial for Knight Frank, said: “ The big box development pipeline is limited for the region with only seven units over 100,000sq ft currently under construction and scheduled for completion in the next 12 months. Quoting rents on these new builds are averaging £9.00-£10.00 per sq ft.
“With a slow down in the big box development and a lack of Grade A units in the market we anticipate further competitive tensions from occupiers trying to secure best-in-class units. This is likely to lead to upward pressure on quoting rents as the year progresses.”
Knight Frank capital markets partner Matt Stretton said investment activity also turned a corner towards the end of the year .
He said: “Investment volumes in Q4 were held up by the off-market sale of a cluster of five logistics units and an office next to Manchester airport all of which were let to The Hut Group.
“Prime industrial yields in Manchester sharpened by 25 bps to 5.25%during Q4 following six consecutive quarters in which Manchester’s prime yields had bottomed out at 5.5%
“The adjustment signals the beginning of a new prime pricing cycle and a transition towards what is anticipated to be a more active market in 2025. At 5.25% Manchester’s prime yields maintain a 25-bps discount compared with prime London & South East industrial.
“Most of the activity has been in the multi-let sector, as opposed to logistics where there are a number of estates that have either traded or are under offer. This demonstrates the depth of buyers, particularly for prime locations.
“Premier Park at Trafford Park saw competition from most of the traditional Ƶ funds, which drove pricing from a quote of £37.5m to the price paid by M&G reflecting £46.9m. The 20-unit 197,000 sq ft multi-let industrial complex is fully let with 65% of the income subject to a lease event within the next 24 months.”
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