Close to 1.2m sq ft of industrial and logistics space was let in Liverpool city region in the first half of 2021 – more than in the whole of 2020 – driven by two key factors. Tony McDonough reports
Take-up of industrial and logistics space in Liverpool city region has hit record levels in the first half of 2021, new figures reveal.
According to commercial property agency, B8 Real Estate, almost 1.2m sq ft of space has been let in the first six months of this year. That beats any previous figure and is more than the 1.1m sq ft of space let in the whole of 2020.
B8 is also reporting an investment boom. So far this year investors, including international pension funds, have committed almost £220m to industrial and distribution property in the region, in line with the previous three years when annual investment averaged £272m – compared to £105m in the years from 2010 to 2017.
There are two main drivers of the surge in demand for industrial and distribution space, B8 says. The first is the acceleration in the growth of e-commerce, helped by the long closures of bricks and mortar retailers during the pandemic. Many companies are also increasing stock levels in the wake of Brexit and the pandemic.
Simon Wood, head of investment at B8 Real Estate, says: “These latest figures confirm that Merseyside is firmly on the map for international property investors who, just a few years ago, would have stuck to Manchester and the M6 corridor in the North West.
“Merseyside not only has a good supply of land. It also benefits from a large workforce, an established industrial base, good connectivity and heavy investment in infrastructure including the Port of Liverpool.
“With confidence in the region growing all the time, the impact is rippling outwards from areas like Speke and Knowsley, with investors now looking at towns such as Widnes and Runcorn which have old industrial sites ripe for redevelopment.
“This is great news as investors create the infrastructure to attract new businesses and jobs, which in turn acts as a catalyst for further development and helps build a stronger economy.”
The biggest investment deal of the year so far was at Speke Boulevard in April, when Warehouse REIT paid £35m for four units totalling 390,000 sq ft, with tenants including flu vaccine specialist Seqirus.
The deal follows a string of acquisitions in Speke in recent years by global heavyweights such as Reality Income, Mirastar which is backed by KKR, TPG, AEW and Blackstone.
The biggest letting of the year was in Knowsley, where a leading online retailer took a 15-year lease on a 650,000 sq ft warehouse, which is being constructed by PLP, a consortium including Peel, the Australian bank Macquarie and Ivanhoé Cambridge of Canada.
Jon Thorne, a lettings specialist with B8, added that while logistics has driven demand, there are signs of renewed interest in UK manufacturing.
He points to the new Prowell cardboard plant in Ellesmere Port which it is claimed will be the most powerful of its type in the world, growth at JLR in Speke, and the £54m glass research and development centre in St Helens that has just secured planning permission.
“Having witnessed the disruption to supply chains in the past year caused by Brexit and COVID-19, many companies realise that they cannot rely on ‘just in time’ deliveries from Europe or the Far East,” he said. “They are increasing stock levels and in some cases, reshoring their manufacturing operations.
“Merseyside has the land, the labour force, the port and the motorway connections and seems a natural location. Towns like Knowsley, St Helens, Widnes and Runcorn were once the engine room of the UK.
“Bringing derelict sites back into use will breathe new life into these old industrial areas, creating new jobs and prosperity in the region.”