^{Source: Savills Research, RCA, Property Data}

■ Of the 6.5 million sq ft transacted in the first quarter 51% was in the Build to Suit (BTS) sector of the market.

■ Interestingly, the BTS deals ranged in size from John Lewis taking 638,000 sq ft at Magna Park Milton Keynes and Parker Knoll taking 100,000 sq ft at Castlewood Business Park in Derby. This means that the average BTS deal in Q1 was 381,159 sq ft, compared to an average Q1 deal size of 254,049 sq ft.

■ At a regional level, the North West was the dominant sector in the first quarter accounting for 23% market share of all sq ft transacted, equating to 1.4 million sq ft, as demonstrated in Graph 2. The first time the North West has been the dominant market since Q2 2013.

CLICK ON IMAGE BELOW TO ENLARGE

^{Source: Savills Research, RCA}

■ Making this level of take up all the more impressive was the fact that the North West market wasn't dominated by BTS deals with 65% of transactions taking place for second hand units. The largest of which being B&M who took the 343,000 sq ft Onyx building.

■ Whilst we split the East and West Midlands in terms of our market analysis it is worth mentioning that combined Midlands market did account for 35% of all transactions, once again demonstrating the importance of "Golden Triangle" locations to retailer and manufacturer supply chains.

■ The retail sector dominated the market with large deals completing for John Lewis at Milton Keynes (638,000 sq ft), Ocado in Erith (600,000 sq ft) and Dunelm Group at Prologis Park Sideway (525,000 sq ft).

Availability

■ Once again supply has decreased quarter on quarter and now stands at just 20.4 million sq ft (England only), having fallen 1.5 million sq ft this quarter.

■ At a regional level The East Midlands, traditionally the largest market, contains the most supply totaling 22.8% of the market. However, this equates to just 4.5 million sq ft across 29 units of which we would only classify nine as grade A. By way of comparison, supply in the East Midlands stood at 11.5 million sq ft in 2009, the market therefore having seen a fall in supply of 61% in just over five years.

■ Whilst we have added some speculative developments which have reached practical completion, such as Tower Thurrock to our database of supply the total amount of grade A stock on the market continues to fall. Indeed, it currently stands 8.4 million sq ft and we expect that figure to fall sharply as deals on units recently placed under offer complete in the coming months.

■ In total, there are currently 24 schemes announced or under construction, that will complete throughout 2015-16. In total, these will add 4.8 million sq ft of stock to the market.

■ Breaking down the analysis for the last two quarters, we have seen a surge in the amount of speculative development announcements as graph 3 highlights. For units over 100,000 sq ft, 19 schemes have been announced totaling 3.85 million sq ft.

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Source: Oxford Economics

■ Whilst some of the announced schemes still have to go through the planning process for detailed consent we do expect that the end of the year will see a number of large units enter our supply statistics and therefore boost total grade A supply.

■ Of all speculative units announced the largest has been Prologis at Grange Park, Northampton at 341,000 sq ft. However, whilst the average size of speculative unit nationwide is 196,000 sq ft, this does vary across regions as Graph 4 shows.

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Source: Savills Research

■ Interestingly, in all regions the average size speculative unit constructed is slightly less than the average deal that region. However, when BTS deals are excluded most regions are showing parity with the market.

Investment

■ Following record transaction volumes in 2014, it perhaps comes as no surprise that the first quarter of 2015 feels a little subdued. Savills have recorded logistics transaction volumes of £602 million for Q1 2015 a 27% decrease on the same period last year as demonstrated in Graph 5.

CLICK ON IMAGE BELOW TO ENLARGE

Source: Savills Research, Property Data

■ Volumes across the wider investment market have remained consistent through the first quarter of this year perhaps suggesting that investors have struggled to deploy capital into logistics due to a scarcity of suitable opportunities during Q1 2015.

■ Demand for logistics investments remains strong with UK funds and logistics specialists continuing as the most active investors. Tritax in particular continue to raise and invest significant capital on behalf of their Big Box REIT.

■ Savills estimate over £250 million of logistics stock currently on the investment market along with a number of transactions taking place "off market" so we expect the market will gather pace throughout the remainder of the year.

■ The availability of opportunities in the logistics sector will continue to be driven by leasing events such as prelets, renewals and regears.

OUTLOOK

The year has started well, but build to suit must continue to account for a large part of the market if take-up is to remain robust…

■ The strong first quarter in the occupier market has put the foundations in place for another strong year of take-up in 2015.

■ The main risk to take-up continuing in this fashion, in our opinion, is the availability of sites able to deliver 500,000 sq ft units on a pre-let basis in the short term. As units of this size make up a sizeable portion of the space transacted within the market.

■ The supply and demand dynamics are having an impact on market rents. The West Midlands and Greater London are currently seeing particularly strong growth with 3.25% growth forecast for industrial properties in the West Midlands and 3.5% in for South East for 2015.

■ With over £250 million of logistics stock currently being tracked through the investment market we believe that total investment volumes have the potential to increase in the coming quarters as more BTS deals complete and any market hesitation the General Election has triggered dissipates.