HARRIS LAMB PREDICTS POSITIVE YEAR AHEAD FOR MIDLANDS INDUSTRIAL SECTOR
Commercial agents at Harris Lamb are anticipating a positive 2024 for the Midlands industrial and logistics sector with anticipated economic stability bringing renewed confidence to the marketplace, with construction underway on new schemes within the region to evidence early green shoots.
Experts at the business said that continued falling inflation, stable – if not yet reducing – interest rates and a renewed commitment from developers to speculative development pointed to an encouraging year ahead.
Neil Slade, Director, said: “2023 has presented varying challenges for the industrial market to follow the record-breaking performances over recent years, where economic factors including high inflation and rising interest rates compounded the wider cost-of-living crisis and where society has the geo-political impact of the conflicts in Ukraine and Gaza. Consequences of such has been a slowing in take-up and pipeline development through 2023, uncertainty on future market conditions and a standing-off on deals where the market seeks to rebalance.
“However, as we exit 2023, inflation continues to fall to what is now sub 4% and interest rates have stabilised. With the Bank of England now having confirmed they will be held at the current rate of 5.25% and previous forecasts to 6% unlikely, there is renewed confidence within the market, at least where conditions should now start to improve and interest rate falls in 2024 are possible” said Neil.
“The well-documented supply versus demand imbalance has been a key factor in the industrial sector with pent-up occupier demand driving rents and weak supply generally unchanged as we re-enter improved market conditions. For one, should consumer spendingincrease in 2024, the e-commerce sector should benefit and that will in turn lead to take-up in the logistics market and where several distribution warehouses have gone Under Offer in the region during Q4.
“With many areas of the Midlands devoid of supply, it is extremely encouraging to see developers prepared to commit to speculative development to kickstart pipeline and satisfy current demand. 2024 will see new build schemes across the region including Schroders at Hartlebury Trading Estate and Vengrove at Erdington Industrial Park with others to be announced in the New Year. To further evidence confidence in the market, there are several developer-led land deals at various stages of delivery including Chancerygate’s recent acquisition of 12 acres in Erdington and fervent interest on land opportunities including Birmingham, Coventry and Rugby.
“There will no doubt be some caution as we move into 2024 but the economy has proved to be more resilient to the shocks of the pandemic and energy crisis than anticipated and economic growth, whilst conservative, remains. All in all, the economic future is looking significantly brighter and we are quietly confident that there will be an upturn in sentiment and activity in the industrial sector as we move into the New Year,” he added.