UK logistics space falls to ‘record low’, report finds
Demand was reportedly led by online retailers, with 43% of Q3 take-up, as well as third-party logistics operators
Logistics and industrial space across the UK has fallen to a “record low”, with demand rising amid the 16.1 sq ft already taken in Q3, according to new data from Cushman and Wakefield.
It found that 48.9m sq ft was taken so far this year, with 2021 on track to overtake 2020’s take-up volume of 53m sq ft. Demand was reportedly led by online retailers, with 43% of Q3 take-up, as well as third-party logistics operators.
Retail estate group Cushman and Wakefield said this “booming demand” has resulted in an “unprecedented squeeze” on supply.
For the first time since it began tracking UK logistics and industrial supply in 2009, availability has fallen below 50m sq ft, to 49m sq ft. It added that this has “sparked a new wave of speculative development”, with 12m sq ft in the pipeline as at Q3.
In addition, 2021 is set to make a “new record” with £10.7bn having been transacted during the first nine months of the year. Data found that activity has been “dominated” by overseas investors, primarily US private equity companies, which have undertaken 63% of transactions so far in 2021.
Richard Evans, head of UK Logistics and Industrial at Cushman & Wakefield, said: “Demand continues to outstrip new supply with rental growth accelerating as a result, particularly in London.”
Ed Cornwell, UK Logistics and Industrial Capital Markets partner at Cushman and Wakefield, said: “We continue to see relentless investor demand for UK logistics. We are currently tracking more than £22 billion in capital wanting to enter the sector which equates to approximately four years’ worth of transactions pre-Covid.”
Bruno Berretta, UK Retail, Logistics and Industrial Research lead, Cushman and Wakefield, added: “While e-commerce remains the main driver of activity, it is interesting to see demand emerging from ‘new’ sectors such as electric/smart vehicle manufacturing and vertical farming.
“While their overall property requirements are relatively small so far, a greater focus on the ESG agenda going forward coupled with supply chain re-orientation post -Brexit could see this new breed of occupiers becoming increasingly prominent in the not-too-distant future.”
