‘Choosy’ West Midlands occupiers drive widening quality gap
Industrial landlords with ageing stock are facing mounting pressure to invest as occupier expectations evolve, fresh research by Solihull-based agent Shepherd Commercial shows.
Demand for small to mid-box industrial space remains strong, but Shepherd’s H1 2026 market report highlights a growing disconnect between businesses with fine-tuned requirements, and some of the region’s existing industrial stock – leaving high-quality space at a premium.
Managing director Kaine Arkinson says occupiers are now taking longer to make decisions, carrying out greater due diligence and negotiating harder on lease terms, with the days of landlords relying on location alone to let their properties apparently over.
‘It’s an occupiers market’
“There’s this huge misconception that occupier demand is basically drifting, it’s not that it’s drifting at all, it’s that occupiers are becoming increasingly considered,” he told Place Midlands.
“Rather than just looking at the standard price, access and power people are looking at the specification as a whole and not just location. We’re still seeing that businesses are expanding, relocating, investing, and the mindset shift really has been that people are thinking much longer term than they were two or three years ago.
“Places like the Black Country, Walsall, Wolverhampton have such a liquid industrial market and historically they always have done because of the geography of it, but they’re increasingly becoming more dilapidated and it’s become an occupiers market really, in the sense that they have the pick of the bunch with regard to spec.
“As a landlord you have two options, basically. You either race to the bottom on rent because you’ve got a dilapidated warehouse, or you invest in the property and go a bit longer term, increase the EPC, redecorate, put a new roof on it – whatever it may be – and try and charge that extra £2 or £3 per square foot. ”
Rents still on the rise for premium properties
That trend is now creating a widening divide between prime and secondary industrial assets.
Well-presented buildings in established locations continue to attract strong competition and premium rents, while older accommodation requiring significant investment is taking longer to let.
The contrast is particularly evident across the West Midlands, where Solihull continues to command some of the region’s highest industrial rents thanks to limited supply, strong connectivity and an established business base, while parts of the Black Country face a greater challenge as ageing stock struggles to meet modern occupier expectations.
“Because of the way the Solihull market is made up, it’s very low liquidity market,” added Arkinson.
“There’s not an awful lot of industrial in Solihull and what little there is is super high quality, and that’s why in 2021 the areas which were first creeping over £10 per square foot were in Solihull and the M42 corridor, which left landlords in the Black Country for instance, where there’s a lot more stock, looking at the other side of the city and wondering what their next move was.
“It’s taken two or three years to filter across that if you invest in the stock and spend the money it’s a much better proposition that trying to lower rents on a dilapidated warehouse.”
Research carried out by the firm shows factors such as energy performance, loading arrangements, presentation, parking and power capacity now playing a much greater role in decision-making.
As more occupiers invest in automation, electrification and advanced manufacturing, access to sufficient power is also becoming a key differentiator between modern and ageing stock.
“In the West Midlands we’re sitting on one of the most liquid industrial markets in the UK, but we’re almost playing catch up because of that mis-match basically.
“The market may have become more disciplined than it was during the post-pandemic boom, but the occupier demand remains. The challenge is ensuring the right product exists to satisfy it.”
