Mixed results for North West industrial market in first half of 2024
A recent report from agent B8 Real Estate shows that investment transactions were down 7% compared to the five-year average, while the occupational market saw a slight upswing in big box take-up.
Investment
Transactions totalling £538m across 32 deals were completed in the first half of 2024. This is less than the five-year average of £579m, according to B8RE.
It’s a mammoth decrease compared to the same period last year, which saw £979m across 29 deals. That figure was, however, bolstered by a gigantic deal: Blackstone’s £480m acquisition of Harbert Management Corporation’s 7m sq ft Greater Manchester portfolio. Take that away and the first half of 2024 actually outperformed its predecessor, which then would only have had £449m across 28 deals.
B8RE noted that investors were keen to acquire prime assets and those with short-term, value-add opportunities. Other assets were less enticing. International businesses are also keeping their tabs on the market, with activity from the United States’ Cabot Properties to Europe’s Mirastar/KKR.
“The North West industrial sector had a relatively stable H1 2024 in terms of pricing and performed well compared to other property sectors,” said Joe Sinclair, associate director of investment at B8RE.
“Arguably, the biggest challenge of 2024 has been the lack of opportunities available to investors, stifling activity and the availability of comparable pricing,” he continued.
“While investors have remained cautious, there remains a significant amount of capital continuing to back the industrial sector, with many investors highlighting the North West’s strong occupational market and future rental growth.”
Occupational
B8RE predicts that the occupier market will see between 3m and 4m sq ft of big box taken up by the end of the year. Already the big box market has achieved 1.3m sq ft in eight transactions.
Expect a very strong second half, according to director Will Kenyon.
“While the figures for occupational demand have only shown a marginal increase in H1, we predict the year-end figures will see a further improvement,” he said.
“There is more than 1m sq. ft. of space currently under offer, including several large – 300,000 sq. ft. and over – requirements live in the market.”
As for rents, big boxes are going for £10/sq ft, with quoting rentals of £10.75/sq ft. B8RE added that multi-let industrial was seeing an increase in rents as well – reaching £18/sq ft at Trafford Park.
Expect figures to change as more big box units come on the market. Speculative new-build availability was 2.6m sq ft across 11 units this half, according to B8RE. The previous half’s figures were 2.2m sq ft.
The agent noted that another 3.5m sq ft across 14 units is under construction.
