As mentioned in our previous report, requirements in the East of England surged in the first half of last year, which subsequently stimulated take-up in H2 2024. Requirements have since stabilised, leading us to believe the region has returned to normality following the record lows seen due to economic and political turmoil in 2023. The vacancy rate has remained stable at 6.07%, with Peterborough 736 continuing to dominate the available supply, accounting for 32% of the total available space.

Supply

The level of supply in the market has increased by 0.5% from this time twelve months ago, despite a slight dip in H1 2024. Given the long-term annual average take-up, this equates to 1.83 years’ worth of available supply within the East of England. It should be noted that 32% of the available supply in square footage terms is within a single building, Peterborough 736, which comprises 736,000 sq ft of grade B second-hand space. As this unit transacts, the supply and demand dynamics will likely shift back towards a ‘landlord’s market.’

Analysing the vacant supply by grade, there is currently no new speculatively developed space available, with all units being second-hand. However, 25% is considered good quality grade A second-hand space, 43% is second-hand grade B space, and 32% is second-hand grade C space. By unit count, there are four units available 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, and one over 500,000 sq ft.

Take-up

Transactional activity has returned in 2024, as highlighted by our in-house requirements index. Take-up reached 1.43 million sq ft, marking a 129% increase compared to the lows seen in 2023 and a 13% increase above the long-term annual average take-up figure of 1.25 million sq ft. Savills continues to observe a lack of high-quality space and a minimal speculative development pipeline, which is hindering broader market activity.

Occupier preference continues to revolve around best-in-class quality space, with 61% of space transacted in 2024 being built-to-suit (BTS) space and 39% being new speculatively developed space. According to the five-year annual average, 53% of space transacted per annum is BTS space, 18% is new speculatively developed space, and 29% is second-hand space. Analysing transacted activity by grade, in 2024, 39% of space has been speculatively developed grade A space, and 61% has been BTS space. By comparison, the long-term average shows 7% of space transacted per annum is grade A speculatively developed space, 52% is grade A BTTS space or grade A second-hand space, 31% is grade B space, and 4% is grade C space.

In 2024, there has been one deal within the 100,000–200,000 sq ft size band, two within the 200,000–300,000 sq ft size band, and one within the 300,000–400,000 sq ft size band. According to the long-term annual average, the region typically sees four transactions in the 100,000–200,000 sq ft size band, two in the 200,000–300,000 sq ft size band, one in the 300,000–400,000 sq ft size band, and one over 500,000 sq ft.

In 2024, 74% of demand has stemmed from manufacturing-related firms, 17% from third-party logistics firms, and 9% from food producers.

Development pipeline

There are currently two units under construction speculatively within the East of England, totalling 587,000 sq ft. One of these units is in the 200,000–300,000 sq ft size band, and the other is in the 300,000–400,000 sq ft size band.

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