£2 BILLION INVESTMENT SHOWS STABLE WEST MIDS MARKET

  •  

THE WEST Midlands commercial property market enjoyed £2 billion of investment last year, remaining resilient against a national downturn in a tumultuous economic year, a new report reveals.

Our Market Insite 2024 report showed that investment in the West Midlands was only marginally below the year-on-year average by nine per cent, and only 12% down on the five-year average  

That was against a national backdrop of commercial property investment activity projected to total around £37bn in 2023 – a drop of 39% on the previous year.   

Ben Robinson, our director and head of investment, said: “The strong headwinds of high interest rates translating to high borrowing costs, inflationary pressures and geopolitical uncertainty have caused many investors to slow down or pause decisions to buy and sell. 

“As expected, the region was dominated by the industrial market, accounting for 62% of all activity. Against last year’s numbers, volumes significantly rose by 59% to reach £1.35bn, trending significantly above the five-year average at 39%, indicating that investor appetite for good quality industrial stock remains strong.” 

The office sector was the next most active, enjoying £283.4m investment, but with only one large transaction to boost numbers was still down some 32%, trailing the five-year average by 21%. 

“Meanwhile, retail volumes were up on last year by nine per cent with activity totalling £254m,” said Ben. “which may suggest a broadening of investor appetite within the sector.” 

The alternatives market – beyond the main offices, industrial, and retail sectors - which had been experiencing a growing market share over recent years, experienced “significant investor pullback”. Investment volumes fell to £117m, 83% down on the year before and similarly down on the five-year average.  

Overall, prime yields continued to drift out over the year by 25 to 50 basis points. 

The findings were revealed to an audience of industry professionals at our 17th annual Market Insite event in Birmingham - the first in-person event in four years. Further events were held in Leicester, Derby and Nottingham. 

The report details key deals, analysis, and trends in commercial property across the Midlands as well as describes the outlook for the year ahead. 

Among the key deals throughout the year were:  

  • The largest deal in the West Midlands region was the purchase of phase 1&2 of the Ansty Park scheme in Coventry, by Chinese investor JD.com. The scheme was purchased as part of a portfolio transaction from Goldman Sachs for an estimated price of £184m 

  • Outside the industrial sector, Praxis Capital’s purchase of five buildings at Brindley Place, Birmingham, for £125m and totalling 526,300 sq ft, from HSBC Alternative Investments for £125m was the largest transaction 

Sam Hall, associate director, discussed the strength of the food-on-the-go and drive-thru market, where demand was still at a 10-year high, despite a decrease in openings due to rising construction costs and planning process delays. 

Sam also discussed the fall of retail giant Wilko’s in 2023, saying it was not indicative of a larger trend, as other discount retailers had taken on 120 of its stores. He added: “Out of town retail and retail parks have remained resilient across 2023, with discount retailers occupying space in both storefronts and warehousing.” 

While the UK’s retail sector saw 120,000 job losses and more than 10,000 shop closures, national retail vacancy rates across high streets, shopping centres and retail parks reached their lowest point since the first half of 2021, said Sam. 

He said: “The high street is not dead, but it will require retailers to breathe new life into it, as well as their own concepts, to ensure their continued success.” 

Sam also mentioned a notable trend in 2023 - the surge in electric vehicle charging point operators seeking sites and opportunities, leading to a 50% year-on-year increase in available charging points in the UK. 

Adam Rock, director and head of our Birmingham office, said: "Despite much uncertainty and the ongoing turbulence within the market, the first 22 months of the Birmingham office have far surpassed expectations. 

“Due to this successful start, we have exceeded our initial forecasts and then some, positioning ourselves in a very healthy place as we look to the future. I continue to be incredibly proud of the progress we have made in such a relatively short period.”  

Learn more, and to read the full report, visit: 

https://www.innes-england.com/assets/downloads/Market_Insite_Brochure_2024.pdf