Property demand at record level in 2016

UK-wide industrial and logistics take-up totalled 99.2 million sq ft in 2016, up three per cent on 2015 and six per cent above the five-year annual average, according to Lambert Smith Hampton’s Industrials and Logistics report.

Grade A space accounted for a record 34 per cent share of total take-up.

The uplift in demand was driven by a record year of activity in the logistics sector where take-up increased by 6 per cent, surpassing 2014’s previous high and totalled 37.3m sq ft.

Amazon accounted for over 20 per cent of logistics take-up – a record share for a single occupier.

Across 60 UK markets, prime headline rents increased by 5.3 per cent in 2016, rising from 3.9 per cent in 2015.

The North West was the star performer, seeing the strongest growth in both prime and secondary stock, rising by 10.3 per cent and 12.9 per cent respectively.

Steve Williams, head of industrial and logistics at Lambert Smith Hampton, said: “Reflecting on a tumultuous 2016, it is remarkable just how strong the year turned out to be for the UK industrial and logistics sector. Rental growth not only continued – it accelerated; logistics take-up surged to a new record and pricing in the investment market stands higher now than it did pre-Referendum.

“2016 was, however, flattered by Amazon, who took an unprecedented share of the market, which underlines how the drivers of demand have changed radically from the last cycle.”

Despite a resurgence of development, overall supply fell by a further 18 per cent in 2016 to stand at a new low of 161.1m sq ft.

10m sq ft of speculative development was delivered in 2016, pushing the supply of Grade A space to 19 per cent, improving from a low of 9 per cent in 2013.