Gerald Eve’s ‘Prime Logistics’ report for Q2 2023 has revealed that the quarter has seen the lowest level of UK logistics property take-up since Q4 2017.
Take-up levels dropped by 16% from the previous quarter to 9.8 million ft². The volume traded was 27% below the 10-year quarterly average, with levels having steadily declined on average from a peak of over 25 million ft² in Q4 2021.
The report attributes this slowdown in demand to a market readjustment following ‘exceptional activity levels’ over the past three years.
Josh Pater, Partner at Gerald Eve, explained: “Expansionary occupier demand from dedicated internet retailers has inevitably slowed from the pandemic peak. Many internet retailers are now revisiting business plans and looking for ways to save costs and make efficiencies.
“E-commerce, more generally, remains a long-term structural driver of demand for logistics space, and there are others too that will continue to make an important contribution, such as green energy production and EVs, companies nearshoring operations to improve supply chain resilience, and even high street retailers looking to upgrade to more sustainable accommodation or increase their e-commerce offering.
“On balance, once the dust settles, post-pandemic demand is still likely to be around 10% above pre-pandemic.”
During the same time period, the availability rate of UK logistics space rose from 4.7% in Q1 to 5.4% in Q2. This, Gerald Eve claims, is due to ‘a combination of additional spec-built stock and an upturn in marketed sub-lets and assignments’.
Other findings from the report included the average rent paid by occupiers in different regions of the UK. Areas of London and the South East had the highest average rent, with Birmingham’s rental prices also being higher than the national average.
In Park Royal, North West London, occupiers can expect to pay over £20 more per ft² than the UK average. While the average across the nation is £10.79, in Park Royal it is £31 per ft².
There’s still time to submit entries for the brand new ‘Property Partner of the Year Award’ at the 2023 Supply Chain Excellence Awards, but hurry – the deadline for new entries is Friday 28 July!