Our Thoughts
Tue, 10/10/2023 - 12:00
· 3 min read

Why a sheds refit drive is needed to keep the motor running

Rishi Sunak last month announced that the UK has overtaken France to be the 8th largest auto manufacturing sector in the world. Data from Make UK estimates that in 2021 auto manufacturing output was £218 bn [GB] vs £210 bn [FR] with more recent figures suggesting that it continued to grow to £224 bn last year. 

In the same week, BMW Group said they are to invest in excess of £600 million into MINI factories in Oxford and Swindon, protecting 1000s of jobs. This follows other notable announcements such as Tata Group's £4 billion gigafactory and Stellantis’ £100 million investment into Ellesmere Port.

This is all, of course, welcome news for both the economy and the industrial sector on which its growth relies, but with supply of new units tight and impacted by falling construction starts, how do we keep the motor running?


Strong demand from car manufacturers


In the second quarter of this year, the manufacturing sector overtook logistics demand, 36% of all big box space leased. In 2022 the manufacturing sector only accounted for 15% of take-up in sheds.  As demand from other sectors softened towards big box industrial and logistics units in Q2 2023, renewals of existing Jaguar Land Rover and BAE Systems leases which amounted to over one million sq ft, and Rolls Royce taking 145,000 sq ft at St Modwen’s Derby delivered a strong quarter for manufacturing. Furthermore, Tesla have reported significant interest in a new 338,000 sq ft unit in Milton Keynes.

As the automotive sector thrives, the demand for space may see it coming up against the diverse occupiers in industrial property. Logistics has dominated big box take-up in recent years with operators like Amazon, Evri, DHL and Iron Mountain taking millions of sq ft. In Q3 of this year, non-automotive manufacturers like Caterpillar, Modpods and LWC Drinks have taken over 500,000 sq ft combined. Diversity in big box occupiers means that car manufacturers and their suppliers will have serious competition for top units.

To give you an idea of the scale we’re dealing with, The Society of Motor Manufacturers and Traders (SMMT) reports that there are 25 car manufacturers currently in the UK, served by the 2,500 component manufacturers in the country. That’s a significant demand pool on its own without factoring in continued on-shoring as ‘Made in Britain’ moves closer to a reality. It’s not only a case of cutting down supply time, having production within the UK allows for stronger quality control too.


Car part suppliers taking space too


While big box spaces have taken the headlines in car manufacturing, suppliers will look to take stock up to 100,000 sq ft. These existing spaces mostly need retrofitting to meet occupier demands on operational efficiency. As part of these refurbishments, landlords should consider the requirements of the automotive supply sector, predominantly access to power, as there is potential for rental growth as the sector revs up.

Having been in the shadows of the logistics boom, it would appear that industrial estates are going to see a lot more activity. The announcements from JLR and BMW have given much clarity to suppliers on production, particularly for electric vehicle parts. Having held back on expansion, it is now full speed ahead and even softened sentiment from the prime minister on his green agenda will not be a red light on the clear direction of travel towards EV. Clearly, with the support of the industrial sector, the future will be electric.


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Industrial & Logistics Update Q2 2023

Why a sheds refit drive is needed to keep the motor running