- For the first time on record logistics and industrial availability slips below 50m sq ft
- 2021 take up is set to overtake 2020’s record – with 48.9m sq ft secured in the first nine months of the year as e-commerce continues to expand.
- Q3 was the sixth consecutive quarter in which take-up has exceeded 13m sq ft
- Investment for quarters 1-3 has already matched the record annual total of £10.7bn set in 2017
Demand for UK logistics and industrial space continues to power ahead with the 16.1 million sq ft taken in Q3 pushing availability to record lows, according to new data from Cushman & Wakefield.
With 48.9m sq ft taken so far this year, 2021 is also on track to overtake 2020’s take-up volume of 53m sq ft, which was itself a record. Online retailers, with 43% of Q3 take-up, and third-party logistics operators, continue to lead demand.
This booming demand has resulted in an unprecedented squeeze on supply and, for the first time since Cushman & Wakefield began tracking UK logistics and industrial supply in 2009, availability has fallen below 50m sq ft, to 49m sq ft. This in turn has sparked a new wave of speculative development, with 12m sq ft in the pipeline as at Q3, in an attempt to match supply to demand.
Richard Evans, Head of UK Logistics & Industrial at Cushman & Wakefield, said: “Demand continues to outstrip new supply with rental growth accelerating as a result, particularly in London.”
On the investment front 2021 will set a new record, with £10.7bn having been transacted during the first nine months of the year on a par with the record annual volume registered in 2017. Activity has been dominated by overseas investors, primarily US private equity companies, which have undertaken 63% of transactions so far in 2021.
Ed Cornwell, UK Logistics & Industrial Capital Markets Partner at Cushman & Wakefield, said: “We continue to see relentless investor demand for UK logistics. We are currently tracking more than £22 billion in capital wanting to enter the sector which equates to approximately four years’ worth of transactions pre-Covid.”
Bruno Berretta, UK Retail, Logistics & Industrial Research Lead, Cushman & Wakefield, said: “While e-commerce remains the main driver of activity, it is interesting to see demand emerging from ‘new’ sectors such as electric/smart vehicle manufacturing and vertical farming. While their overall property requirements are relatively small so far, a greater focus on the ESG agenda going forward coupled with supply chain re-orientation post -Brexit could see this new breed of occupiers becoming increasingly prominent in the not-too-distant future.”