Flight to prime for warehouse occupiers as ESG kicks in
Property consultancy Lambert Smith Hampton says the industrial and logistics property market is ‘moving back into balance’ with occupiers focussing on getting the best quality facility to fulfil growing ESG commitments.
National Head of Industrial Leasing Richard Meering said: “The pandemic-fuelled rush for space has steadily given way to a more settled and balanced phase. It seems likely that the theme of 2023 will be a flight to quality, rather than a gold rush for new space. The bulk of market activity during the past year has centred on prime stock and this looks set to continue as occupiers seek to fulfil their ESG obligations and mitigate rising energy costs by taking on only the most efficient properties.
“The move towards more sustainable patterns of leasing should come as no surprise, nor offer cause for alarm. and, while activity did slow appreciably in the latter part of 2022, improving certainty in the economic outlook should lead to improving activity as 2023 progresses.”
According to Lambert Smith Hampton research, total take-up of space for the year in 2022 hit 60.5m ft², making it the second highest year on record, despite a subdued Q4 amid growing economic uncertainty.
UK-wide speculative development soared to a new high of 23.6m ft² at the end of 2022. This has helped drive a partial recovery in overall supply from 2021’s all-time low, albeit the availability rate of 3.6% is still extremely tight. While supply will continue to recover in 2023, it will be relatively minor, with a modest 13m ft2 of new speculative development starts anticipated in 2023.
Prologis has had huge success with its Prologis Park Beddington scheme Croydon, South London where it has developed all the units to the highest ESG credentials targeting BREEAM Excellent and EPCA+. It has just recently let DC3 totalling 139,977ft² to Harvest London, a leader in the innovative sector of vertical farming. The unit will be net zero in operation.