According to property consultant Savills total take-up of UK warehouse space to date has exceeded 5 million sq ft, with a further 1.9 million sq ft under offer – an 85 per cent increase on last year’s figure of 2.7 million sq ft (250,838 sq m).
Savills anticipates that take-up is likely to surpass the long term average for Q1 of 5.4 million sq ft, reaching close to 7 million sq ft by the start of Q2. This has been driven by a number of significant mega-shed deals including The Range’s 1.2 million sq ft facility in Bristol and Amazon’s 1 million sq ft distribution fulfilment centre in the Midlands. The ongoing strong performance of high street and online retailers continue to dominate the market as they adapt to changing consumer habits.
Richard Sullivan, national head of industrial and logistics at Savills, said: “It has been an exceptional start to the year for the industrial and distribution sector across the UK. Take-up is set to reach record levels by the end of Q1 as occupier demand remains high, most notably from manufacturers and online retailers. There continues to be a lack of modern and fit-for-purpose warehouse space available, however with 39 speculative schemes currently in the pipeline, this will help to address the issue over the next 12 months.”
As a result of this growing demand, delivery of new speculative warehouse space across the UK is set to increase this year by up to 160 per cent. There is currently 8.8 million sq ft of speculative development due for delivery in 2016, with major schemes in the pipeline including Logistics North In Bolton where First Industrial are delivering 357,000 sq ft and Prologis Park Dunstable where 358,068 sq ft will be available in the Spring. This is a marked increase on last years figure of 3.3 million sq ft. In 2015, 25 per cent of new space was let prior to completion, suggesting that a significant increase in construction is necessary in order to satisfy the current market requirements.
Simon Collett, head of building and project consultancy at Savills, adds: “This phase of speculative development is different from the last and needs to be as the occupier base continues to shift. The onus is now on investors and developers to consider flexibility in their building design, both for the here and now and the mid to long term. The idea that one-size-fits-all is under serious challenge, so by guaranteeing that buildings are flexible, environmentally sustainable and cheaper to run you can future proof space, which ultimately reduces the risks for investors when trends inevitably change in years to come. It is now crucial that individual consideration be given to each new site, build-to-suit included, as flexibility is the new currency when it comes to industrial and logistics.”