Lack of industrial space 'a major issue' for West Midlands, say property experts

And more employment land is being lost to homes schemes to fix the housing shortage, says RICS – the Royal Institute of Chartered Surveyors. Hopes now lie with the region's Metro Mayor, due to be elected this week, to tackle the problem.

Geoff White, RICS policy manager for the North & Midlands, said: "The shortage of industrial and commercial units is a major issue in the West Midlands and a concern for RICS professionals in the region.

"They have welcomed the government's intention to develop an industrial strategy across the UK and the focus this will bring to offices, industrial units and commercial sheds.

"Employment land is being lost to residential schemes to fix the housing shortage, but this means opportunities for businesses to start, grow and relocate are shrinking.

"In addition to this, uncertainty in the economy means much-needed speculative commercial development is extremely rare or non-existent without some form of public sector intervention.

"Unless the industrial strategy tackles this, the government's plans to drive economic growth and improve productivity could be in jeopardy.

"One answer would be to ensure that any future 'metro mayors' would have powers to protect employment land and to develop strategic development plans that would bring together the currently disjointed local and national plans for transport infrastructure, housing and industrial and commercial real estate."

Meanwhile the RICS UK Commercial Property Market Survey for the first three months of the year has shown the market continuing to pick up in the West Midlands, with industrial space outperforming office and retail.

As investor demand increases for regional commercial property across all sectors, with 7% more respondents reporting a pick-up in enquiries, industrial assets have been most sought after in Q1. 17% more respondents saw an increase in demand for industrial space across the West Midlands in the time period. Overseas investment demand also grew across the industrial sector in Q1, however fell for office and retail space. The industrial sector also continued to perform strongly in terms of capital value expectations with 22% more respondents anticipating prices to rise over the next three months.

Demand for commercial property in the region increased again with 25% more respondents seeing a rise in demand; demand has continued to rise since Q3 2012. Industrial and office space are the strong performers in the West Midlands commercial market at present with 32% and 33% more respondents, respectively, seeing a rise in demand. Despite the majority of UK seeing a fall in demand for retail space, West Midlands retail continues to report rises despite being the slow performer of the region (a net balance of +10%).

Consequently, availability across the industrial sector continues to decline, with 45% more respondents noting a fall in industrial space during Q1. The amount of industrial space available has been decreasing continuously since Q1 2013. Space available for occupancy in the retail sector, also remains flat.

Given the demand and supply dynamics, rents are expected see the strongest growth in the industrial sector, both over the next three months, and at the twelve month horizon. At the same time, offices are expected to see only modest growth, while rents are anticipated to remain flat in the West Midland's retail sector.

Simon Rubinsohn, RICS chief economist, said: "The results of latest commercial property survey chime with much of the recent generally more positive economic news flow. Significantly, the forward looking indicators are also proving relatively resilient although it would not be a surprise if activity slows somewhat ahead of the forthcoming general election.

"Although around one-sixth of respondents continue to report enquiries from British businesses looking to find space to utilise elsewhere in the EU, foreign investment into the UK is continuing to recover with the RICS overseas demand indicator rising for all sectors at a headline level and in most parts of the country."