Average land values across the UK jumped 40% year on year to July 2021 as demand for warehouse space goes unabated according to the latest research from Colliers.
“We’re not seeing a situation of this magnitude anywhere else in Europe,” said Andrea Ferranti, Head of Industrial & Logistics Research at Colliers. “Sustained demand for logistics space to meet the appetite for online retailing and last mile logistics has caused land values to go through the roof.
Colliers’ Rents Map shows a dramatic acceleration of average land values across England, posting a 40% increase year on year in July 2021, as investors compete for sites. While this is underpinned by strong rental growth, investor appraisals are also supported by a continuation of future expected demand, coupled with further rental growth and moderate yield compression over the coming quarters.
Meanwhile, average prime rental growth for logistics units larger than 100,000ft2 in England posted a positive 13.5% year-on-year in July as the provision of new schemes, accompanied by a low supply environment, is prompting a step change in rental values. Similarly, smaller units of more than 10,000ft2, recorded a 14.5% rental growth.
Len Rosso, Head of Industrial & Logistics, Colliers added: “We expect rental growth for prime and secondary units to continue due to a combination of factors such as; strong tenant demand, dwindling supply, a rise of CPI and the shortage of construction materials which, in some cases, is challenging the delivery of design and build and speculative schemes.”