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Record Year Of Investment And Leasing As Demand For UK Logistics Space Continues To Soar

  • 70.1 million sq ft was let during 2021 - more than double the pre-pandemic average 
  • For the first time on record demand for speculative space outstripped that for built-to-suit 
  • Investment levels also climbed to a new record with £17 billion of deals transacted in 2021, with investment in Q4 alone equivalent to volumes for an average year   

London, 31 January 2022 – Demand for UK logistics and industrial warehouse space - fuelled by the continuing growth in online retail - has continued to soar, with 2021 full year data (for warehouses over 50,000 sq ft in size) showing a new record high in take-up, as 70.1 million sq ft was let or sold for own occupation, according to new figures from Cushman & Wakefield. 

The figure was nearly a third up on the previous high in 2020 of 53 million sq ft and more than double the amount of space transacted during a ‘normal’ year pre-pandemic. From an investment perspective, the market also had a record year in 2021, with £17 billion of deals transacted. The final quarter alone saw as much investment as an average calendar year (£6 billion+). 

Demand focused on good quality floorspace, with over 40 million sq ft of new space taken by occupiers in 2021. The data showed that for the first time on record, more speculative space (20.6 million sq ft) was taken than built-to-suit, reflecting the urgency with which many occupiers currently need space.  

Online retail was the main driver of lettings, as e-commerce operators committed to 20.5 million sq ft in 2021 - accounting for 33% of total take-up of logistics space. Many multi-channel retailers also took warehouses to serve both their online and store-based retail networks. Logistics providers were also hugely acquisitive in 2021, taking 13.6 million sq ft, or 22% of the 2021 total.  

In response to the exceptional occupier demand, developers delivered 13.7 million sq ft of speculative development, almost double 2020’s volume of 7.3 million sq ft. The development pipeline for 2022 is even bigger, with over 15 million sq ft of space currently under construction.  

The research shows that developers are continuing the trend of building smaller units of 50,000 to 200,000 sq ft, but such is their confidence in occupiers’ appetite for new space, some have committed to larger units of 400,000 sq ft +, and to projects outside ‘core’ locations. These include, for example, Birkenhead and Ellesmere Port in the North West and Peterlee in the North East. 

Richard Evans, Head of UK Logistics & Industrial at Cushman & Wakefield, said: “2021 was nothing short of an extraordinary year for logistics and industrial space and we expect to see continuing high levels of activity in 2022 as much-needed new stock is brought to market. 
“As e-commerce-led demand continues to outstrip supply we are seeing rental levels and land values reach news highs across the UK, especially in London. A recent increase in speculative development is welcome but more will likely be needed to keep up with current levels of demand given how constrained supply is currently.” 
From a capital deployment perspective, many investors continued their aggregation strategies, with portfolios accounting for 50% of total volumes as a result. The largest single transaction of the year in this category was the £1.7 billion sale and lease back of Asda’s warehouse portfolio to Blackstone. 

Last year also saw several large pan-European/global portfolios with UK logistics exposure change hands, such as EQT Exeter and Cabot Properties' portfolios. The trend towards building scale was illustrated by increasing lot sizes. For example, in 2021 there were nearly 80 deals more than £50 million (of which 43 were single asset), compared to just over 30 in 2020.  

Another trend is the continuing influx of capital from overseas, with overseas investors accounting for over 60% of total volumes in 2021, compared with 54% in 2020. 

Ed Cornwell, Partner, UK Logistics & Industrial Capital Markets at Cushman & Wakefield, said: “Investors' appetite for the sector shows no sign of abating, giving every indication that 2022 could be yet another strong year in terms of volumes. Due to the weight of capital, we expect further yield compression, albeit not by the extent seen over the last 12 months, during which the sector has returned over 40% according to figures recently released by MSCI. To put things in context, office and retail returned 5.1% and 14.6% respectively over the same period.” 


Richard Coleman, Head of Communications EMEA
Richard Coleman

Head of EMEA Communications • London

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