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The East Midlands is a small to mid-box ‘hotspot’ and still has huge growth potential, but under supply is holding it back

The East Midlands is a small to mid-box ‘hotspot’ and still has huge growth potential, but under supply is holding it back

The East Midlands is one of several English locations that has been identified as a ‘hotspot’ for investment in the small to mid-box segment of the I&L market, based on an analysis of socioeconomic factors, local infrastructure and leasing activity over the past five years, according to a report jointly published by Potter Space and Savills. 

However, the report also reveals that the under supply of sub-100k sq. ft. space over the past five years (2016-2021) has cost the regional economy in lost opportunities for jobs and wealth creation. 

The report reveals that the total amount of floorspace allocated to the small to mid-box market in the East Midlands – Leicestershire (44m sq. ft.), and Nottinghamshire and Derbyshire (a combined 34.8m sq. ft.) - is 78.9m sq. ft. Rents for small to mid-box space in the region grew strongly in the decade to 2021 – at a rate of 67% in Leicestershire and 41% in Nottinghamshire and Derbyshire (combined). 

Jason Rockett, Managing Director of Potter Space, said: 

“Strong rental growth in the East Midlands reflects the high demand we are seeing for small to mid-box space, but rents are clearly also being driven up due to a lack of supply of sub-100k sq. ft. space to meet the needs of businesses in the area.  

“We are calling for local planners to recognise the economic opportunity that exists here in the East Midlands and allocate more land for the development of sub-100K sq. ft. property. This will help to attract inward investment and create jobs for local people.” 

From a national perspective, the report reveals that the current lack of supply of sub 100K sq. ft. space is responsible for the English economy missing out on an estimated £480m GVA (Gross Value Added) pa, as well as 8,600 direct and 7,300 indirect jobs pa. 

The importance of the small to mid-box I&L property market to both the regional and national economy should not be underestimated. This segment of the I&L market accounts for 95% of all I&L property nationally, and more than half - 56% - of its total floorspace. Occupiers of small to mid-size boxes can include a variety of business types– from the largest multinationals, through to the smaller local players.  

Demand for small and mid-box property remains strong, despite increased economic uncertainty, and is still expected to grow.  

Mark Powney, director, Savills Planning Economics team, said:

“Our research into the small and mid-sized segment of the I&L market has demonstrated it too is experiencing strong demand but is facing a lack of available supply.  The types of companies that occupy small and mid-sized units are extremely diverse as are the occupations they support. Therefore its future growth can contribute positively to local and regional towns up and down the country, especially given a number of other commercial sectors are facing significant structural challenges.” 

Jason Rockett, said:

“Under supply is a major problem, especially in regional hotspots like the East Midlands. Developers are ready and willing to invest in the development of more small to mid-box space to do what we can to help meet demand and support the growth of the local economy. Without more land allocation for small to mid-box space, this growth potential can’t be realised and in the current climate, that’s a great shame.” 

To download a summary of the full report Big things in small boxes, visit the Potter Space website

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