JLL predicts mid-2012 lift

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Jones Lang LaSalle predicts growth by the middle of 2012, and already has some 24 million sq ft of stated enquiries for logistics units in the Southern and Midlands markets alone.

The firm reckons that industrial rents will remain flat, except for prime areas like Park Royal, but rents in other sectors may rise, and that the third quarter will see an upturn.

Richard Batten, executive chairman UK, said: “This year will see a slow start, but hopefully a strong final burst to lift hopes for 2013. It is clear now that the financial crisis and the ongoing fiscal squeeze have left the domestic economy weaker than previously expected.”

Demand in the logistics market will be driven by retailers, according to Tim Johnson, director and head of industrial and logistics.

“The growth in internet sales will be an important driver for facilities, for both ‘pure play’ and multi-channel retailers. Reflecting this, 2012 will also see more demand for cross dock parcel hubs from parcel operators to service requirements for internet orders that are fulfilled via this channel,” he said.

Johnson describes an emerging polarisation of warehouse requirements, with enquiries for very large facilities over 750,000 sq ft for national distribution and smaller units of around 100,000 sq ft to service city logistics operations.

He also foresees a growth in UK manufacturing, with a trend for bringing production back to the UK due to rising costs abroad.

Facilities will also be required to support growing logistics infrastructure and increasing demand for airport capacity, intermodal and port centric logistics.

Johnson thinks that London Gateway, Port Salford and Rossington inland port are all development that will be promoted in 2012 and will become a viable alternative to the historic hubs of the West Midlands.
Jones Lang LaSalle predicts that low inflation rates will ease real income squeeze, and that business will pick up in the third quarter as long as the Eurozone crisis is contained.

Andrew Burrell, lead forecaster and director of EMEA research said: “With caution still the keynote, this upturn will be driven by structural demand or pre-lets in a market starved of quality supply, rather than active expansion.

“At the end of a long period of gloom, it is hoped that the London Olympics will provide a much needed boost to confidence. Along with the benefits of another burst of asset purchases by the Bank of England, this should begin to have an economic stimulus after mid-2012, when activity is expected to improve.”
Katie Kopec, director, said that the Olympics could boost London’s GDP to 1.1 per cent above the UK average compared to being behind the average in 2011.

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