At the end of September there was just 22.6 million sq ft of Grade A floorspace available nationally, and supply levels are 17% down on the end of 2019, according to the latest research from property consultancy JLL.
Ed Cole, head of logistics at JLL, said: “There is a particularly strong shift in demand for existing units this year and as a result we have seen a significant drop in supply levels.
“Nationally the vacancy rate is falling at the end of the third quarter there was less than 6 million sq ft of space speculatively under construction nationally. As a result, we are already seeing a supply shortage coming through, which we anticipate leading to rental growth for key regions.”
Research from Cushman & Wakefield concurs. Record take-up levels, combined with a slowdown in speculative development, meant there was a 11% drop in supply during the quarter. Supply is now below its historical average across all regions bar the Midlands and the South East, with the North West recording the sharpest year-on-year decline in availability (-39%).
Richard Evans, Head of UK Logistics and Industrial at Cushman & Wakefield, said: “The market trends accelerated by the pandemic continued to drive demand during Q3. Robust take-up is fast eroding existing supply, with some regions and sub-markets now facing a shortage of suitable accommodation across certain size bands. Speculative development has slowed, which means this imbalance could persist. There are signs that prime rental growth could return as a result, particularly for mid-box units.”