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Is the urban logistics tail now wagging the Midlands warehouse property dog?
That’s what it looks like, if a strategic statement of intent from M&G Real Estate is any guide.
M&G said that despite 1M SF of industrial lettings in the Midlands in the last 18 months, it will focus its development and land acquisition efforts on London and the South East.
The firm’s pivot away from Midlands big-box distribution centres reflects the higher rental growth prospects in the urban logistics sector, which is increasingly influencing the thinking of investors.
M&G head of business space Chris Perkins said it will focus “squarely” on London and its region until the case can be made for developing single urban logistics facilities around Birmingham.
“Over the past 18 months we have secured just under 1M SF of lettings on speculatively developed industrial and logistics premises in the Midlands — in Tamworth, Leicester and Coventry,” Perkins told Bisnow.
“It is interesting to observe JLL’s findings that 42% of new speculative large warehouse stock under construction is in the Midlands region. This is a weighty proportion but our focus for any speculative build has shifted from this location, squarely on the South East, unless the case can be made for single last-mile premises in prime locations close to Manchester or Birmingham.”
M&G is hoping for opportunities to “act swiftly to invest at scale”.
“With the general strong appetite for industrial and logistics property from both investors and occupiers, it is widely acknowledged that there is not enough land in the right locations," Perkins said. "At M&G Real Estate, we continue to focus our speculative construction pipeline on London and the South East where we see notable rental growth potential and where the demographics simply necessitate a sheer volume of last-mile logistics capability."
M&G funded the development of three warehouses in Dartford, the first of which is 80K SF and already let with subsequent warehouses of 74K SF and 49K SF due for practical completion imminently and attracting, Perkins said, plentiful interest.
Undaunted, others are pressing on with Midlands big-box developments. This week Evans Property Group completed construction work on a 437,000 SF warehouse at the 350-acre Fradley Park, Lichfield, on the popular A38 corridor.
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