Take-up of industrial warehouse space (units of 100,000 sq ft +) is set to exceed 50 million sq ft by the end of 2020, a record year for the sector due to the growth of online sales.
According to Savills, data shows that online retail accounted for 37% of the 46.8 million sq ft of take-up to date, 29.6% of which has been taken by Amazon.
Savills also notes that even without Amazon’s contribution, take-up would still surpass the previous record of 37 million sq ft in 2018.
The data also showed that 3PLs have also seen the highest level of take-up ever.
Savills has also seen demand soar from alternative sectors such as data centres and film studios.
Consequently, due to this demand from a cross sector of occupiers Grade A supply is at its lowest level since 2016, with national vacancy rate now averaging 6.01%. In response, speculative announcements have picked up in Q4, with 8.54 million sq ft of warehouse space now under construction and due for delivery in 2021.
Kevin Mofid, head of industrial & logistics research at Savills, said: “Even with a month still to go until the end of 2020, the sector has reached unparalleled heights and demand remains strong as we head in to the New Year.
“However, despite the current supply and demand imbalance, we are seeing the availability of second hand stock creeping up, which could increase further still as we see more tenant defaults as a result of the ongoing economic uncertainty.”