UK Logistics Speculative Development report assesses how the current volume of construction might impact the UK logistics property market.
The appetite for speculative development is being partly explained by the prospects of letting space out quickly. In fact, the average void period for speculatively built space fell to just 9 months in the final quarter of 2018 – the lowest level since Cushman & Wakefield began tracking this data in 2009.
“Whilst there will continue to be demand from occupiers for built to suit solutions, particularly in the manufacturing sector, the availability of speculative buildings is important in this dynamic market sector. The immediacy of a building solution for an occupier means they can focus on the operational aspects of their requirements, and therefore satisfy the demands of their customers. The current supply of new buildings does not represent many months’ take-up, and consequently occupiers will still need to focus on building solutions at an early stage.”
Ecommerce occupiers are driving demand. With online sales doubling every five years and forecast to increase to 25% of total UK retail sales, demand from this sector is expected to remain strong for the foreseeable future.
The report also reveals that low vacancies (around 5%), scarcity of land in prime locations and a restrictive planning regime are likely to prevent any oversupply whilst pent-up demand for Grade A space will continue to fuel rental growth.