Regional Insight: The West Midlands industrial sector is in the fast lane

If the logistics sector is in crisis – as some commentators suggested following Amazon’s realisation that leasing a quarter of the UK’s entire warehousing space may have been a tad cavalier – no one has told the UK’s regional agents. Particularly so in the West Midlands, where its central location and strong motorway connectivity mean the only limit on uptake is the speed at which units can be built. It is a situation that leaves Siddall Jones founder and managing director Ed Siddall-Jones in bullish mood as he reflects on a start to the year that has put the company at the top of the EG Radius On-Demand Rankings for the West Midlands, with more than 300,000 sq ft of space transacted across 51 deals. “I would gladly trade my office and retail stock for industrial at the moment,” he says. “We’ve never witnessed: a) what rents we’re achieving; and b) what capital values we’re getting. It’s phenomenal.” It is not just occupiers that can’t get enough of the logistics sector, with a number of investment offerings being snapped up this year before they had even officially hit the market. Echoing Warren Buffett’s most recently expressed public views, Siddall-Jones is a strong advocate of the value of property in uncertain times. “Ultimately, there is still a lot of cash out there that is looking to find a home,” he says. “I think people are viewing property as a sensible investment strategy – stocks and shares are up and down like a yo-yo – it’s a tangible asset that people believe in.” Siddall Jones’ largest deal so far this year was a 71,000 sq ft letting at Hawthorns 70 on the Park Rose Industrial Estate in Smethwick to logistics operator World Depot Inc. During the short construction period of the unit, its headline rent rose from £6 to £7 per sq ft. Despite the considerable economic headwinds around inflation, the cost of living and global events, Siddall-Jones says confidence is high and people are still flocking to Birmingham’s bars and restaurants, five of which are Michelin-starred – the highest concentration outside London. Disruption to supply chains and the resultant increased cost of manufacturing in China, could ultimately lead to many companies choosing to produce goods in the UK, which Siddall-Jones thinks will spell good news for the West Midlands. “There will be a return to manufacturing in the not-too-distant future,” he says. “I think the days of metal-bashing high-volume are probably long gone, but specialist manufacturing and things that – particularly in Birmingham and the Black Country – we have been doing for hundreds of years, hopefully we will do very well out of.” Birmingham is shortly set to open its doors to the world as the host city of the Commonwealth Games, which Siddall-Jones believes will be a huge boost to its international profile. Quite where his company will finish the year on the EG Radius On-Demand Rankings podium remains to be seen, but he is definitely enjoying the race. West Midlands at a glance Average achieved office rent: £16.50 per sq ft Average office yield: 7.68% Average achieved industrial rent: £7.14 per sq ft Average industrial yield: 6.18% Average achieved retail rent: £18.29 per sq ft Average retail yield: 7.64% Investment total: £3.6bn Number of deals: 688 Some 50.9m sq ft of space got the go-ahead in 2021, through 8,917 submitted applications. The majority of space permitted was for industrial development (20.1m sq ft), with office permissions totalling 11.4m sq ft, residential 5.6m sq ft and retail just 1m sq ft. Some 47.2m sq ft of new space is expected to be delivered in 2022 across 1,337 schemes. Residential will comprise 19.8m sq ft of this and industrial 18.3m sq ft. All figures have been sourced from EG Radius and are for the period 1 January 2021 to 31 December 2021, unless stated otherwise To send feedback, e-mail jim.larkin@eg.co.uk Click here to view agent activity by region, county, city and sector using our On-Demand Rankings >> Photo © High Level/Shutterstock