Levels of available warehousing remain 68 per cent lower than prior to the recession according JLL’s latest Big Box Industrial and Logistics market research.
At the end of December 2015, Grade A availability stood at 15 million sq ft of which 9.2 million sq ft was speculatively built including 31 speculative units under construction. The remaining 5.8 million sq ft comprises good quality second hand space.
The amount of Grade A space actually rose over the course of 2015 and more speculative development is on course for 2016. The overall level of availability represented a national vacancy rate of around 6 per cent compared with our estimate of the total Grade A stock.
The West Midlands, South West and Wales all have vacancy rates below the national average.
Compared with the average level of take-up over the last five years (2011-2015), available Grade A supply at the end of 2015 represented less than one year’s worth of demand. Coupled with a vacancy rate of just 6 per cent this suggests that the market is still balanced in favour of investors and developers rather than occupiers.
At the end of December 2015, there were 32 big box units speculatively under construction nationally totalling 6.5 million sq ft, of which one has been pre-let during construction. At the end of 2015 we estimate that the development pipeline of big box schemes that could be speculatively developed over the next 12 to 24 months totalled around another 8.3 million sq ft nationally.
Jon Sleeman, Director UK Logistics & Industrial Research, added:
“ Around 3.6 million sq ft of new speculative space was delivered to the market in 2015. In 2016, this level will approximately double, based on what is under construction now and our tracking of the development pipeline. But relatively limited supply will continue to drive rental growth over the year. We believe that growing online sales and a wider move to more same day or next day delivery will drive demand for more parcel/postal facilities and local distribution depots in major cities. Labour availability will become a critical success factor for industrial occupiers, developers and investors.”