The North West continues to see strong demand for best-in-class quality units from a variety of occupiers. Savills expects rental growth in this region to outperform the rest of the UK, with our baseline forecast predicting a 5.3% rental growth per annum over the next five years. In our positive scenario, this growth rises to 5.6% per annum.

Supply levels have increased by 19% over the past year, as 1.35 million sq ft of low-quality second-hand space has been added to the market.

Supply

Comparing the current level of vacant warehouse space with that of twelve months ago reveals a 19% increase. At present, there is 6.96 million sq ft of vacant space available across 36 units in the region. An analysis of the supply by grade shows that 36% of the vacant space consists of good quality, grade A speculatively developed space, 13% is second-hand grade A space, 23% is second-hand grade B space, and 28% is second-hand grade C space.

In terms of unit sizes, there are currently 26 units available in the 100,000–200,000 sq ft size band, three in the 200,000–300,000 sq ft size band, four in the 300,000–400,000 sq ft size band, two in the 400,000–500,000 sq ft size band, and one over 500,000 sq ft. Supply and demand trends at different size bands reveal that the 100,000–200,000 sq ft and 200,000–300,000 sq ft size bands are oversupplied, though the situation varies significantly at the micro-market level. For units over 300,000 sq ft, the supply-demand balance is more favourable, with most of the wider region experiencing levels of undersupply due to historically high demand.

Take-up

Take-up in 2024 has been subdued, which is not surprising given the economic and political uncertainties that have affected the UK over the past two years, coupled with the increased supply in more central regions attracting occupier interest. Transactional activity in 2024 totalled 3.09 million sq ft across 13 transactions, a 23% decrease compared to 2023.

Analysis of activity by grade shows that 31% of the space transacted in 2024 was new speculative development, 28% was built-to-suit space, and 41% was second-hand space. Despite the increase in second-hand space transacted, there remains a clear preference for best-in-class quality buildings. In total, 83% of the space transacted was grade A, while 17% was grade C.

The decline in transactional activity is primarily due to reduced activity in the smaller size bands compared to long-term averages. In 2024, there were seven transactions in the 100,000–200,000 sq ft size band, three in the 200,000–300,000 sq ft size band, one in the 300,000–400,000 sq ft size band, one in the 400,000–500,000 sq ft size band, and one over 500,000 sq ft. According to long-term averages, there are typically twelve transactions per annum in the 100,000–200,000 sq ft size band, three in the 200,000–300,000 sq ft size band, two in the 300,000–400,000 sq ft size band, one in the 400,000–500,000 sq ft size band, and one over 500,000 sq ft.

Development pipeline

Currently, twelve speculative units are under development across the North West, totalling 2.79 million sq ft. Of these, seven units are in the 100,000–200,000 sq ft size band, which will likely leave this size band oversupplied in the short to medium term. There is one unit in the 200,000–300,000 sq ft size band, two in the 300,000–400,000 sq ft size band, one in the 400,000–500,000 sq ft size band, and one over 500,000 sq ft.

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