Rent levels are expected to rise by 1.5 per cent in 2014 and nearly 2 per cent the year after according to the latest Real Estate Investment Forecast from Colliers International.
Rental decreases are expected to cease this year, with an uplift of 1.5 per cent expected in 2014 rising to 1.9 per cent in 2015.
The report reveals that yields are also expected to harden steadily, if modestly, through to 2016 with capital growth registering 2.6 per cent by 2014.
Industrial distribution warehousing is forecast to offer a return of 10.8 per cent in 2014, second only to London¹s City and Mid-town offices, which will offer a higher annual return of 11.1 per cent also in 2014.
Dr Walter Boettcher, Director of Research and Forecasting at Colliers International commented on the findings for the industrial occupier and investment markets: “Investor interest in the industrial sector is linked to lack of supply of large (100,000 plus sq ft) Grade A distribution warehouses, UK wide, and to steady demand for multi-let industrial parks in London and the South East.
“The impact of e-commerce and internet supply logistics cannot be underestimated, nor that of on-going consolidation of supermarket supply chains. Lack of finance is holding the sector back, although alternate funding sources (e.g. insurance companies/ pension funds) are looking increasingly at Œforward funding and Œdesign and build opportunities.”
Colliers International’s latest Property Snapshot for March 2013 also showed that availability of new and refurbished space represents just over two years of supply for the UK. London, the South East, Eastern, North East and Wales are all facing a lack of supply in the next 18 months.