More than 10 million sq ft of warehouse space was under offer at the beginning of 2020 – a 233% increase since end of 2018, according to CBRE.
In its latest trading update investor developer Tritax Symmetry chief executive, fund management, Colin Godfrey, said such figures looked promising for developers and investors in the logistics property sector.
“Occupier take-up looks promising for 2020 with over 10 million sq ft of lettings reported to be under offer and carried over from 2019,” said Godfrey.
“Speculative supply has slightly decreased from 2018, but importantly reduced by circa 50% for buildings over 500,000 sq ft, where demand continues to outstrip supply. Attractive levels of rental growth are therefore expected to continue.
“The market for very large Big Box logistics assets continues to display strong fundamentals for 2020 and the longer term. Structural tailwinds are supportive as occupiers upscale the size of their logistics assets to further increase efficiency, reduce costs and rationalise their supply chains, in the face of the rapid transition to omni-channel purchasing by consumers.”
Big box availability decreases
However, according to CBRE, the UK’s Big Box logistics availability slightly decreased through 2019 to just over 27 million sq ft.
Take up in 2019 topped 25 million sq ft means that on last years’ take up figures there is approximately just over one years’ supply going forward.
There were 92 deals were signed throughout 2019. Of that 43.4% of the space taken related to units between 100,000 and 300,000 sq ft, resulting in an average deal size of 275,858 sq ft.
3PLs providers took the most space during 2019 (accounting for 22.7% of take- up), with online retailers on second position (22.1%) and the motor industry completing the podium (18.3%).
Spec shed development increases
Meanwhile, over the course of 2019, available supply – including speculative space under construction – rose by 15% according to the latest research from JLL.
Jon Sleeman, director of UK research at JLL, said: “We saw more speculative starts take place in 2019 and at the end of the year there was 5.1 million sq ft speculatively under construction. We expect to see further speculative development take place this year but overall, against a backdrop of good levels of demand in the market, we are not anticipating an increase in our national vacancy rate this year.”
Quiet Q4 for warehouse property market
Finally Gerald Eve’s latest Prime Logistics report states that the last quarter of the year was hit by ‘economic and political uncertainty in the UK’.
Take up was 24% lower than Q3, with 10.5 million sq ft taken-up in Q4, the overall volume was 11% below the 5-year quarterly average but in line with the 10-year average.
Overall take-up during 2019 totalled 47 million sq ft, which was 7% down on 2018, but comfortably above the 10-year annual average.