Property index shows steady expansion

JLL’s Supply Chain Activity Index maintained steady expansion in the third quarter of 2016, although economic and political uncertainties decelerated growth.

The index is a short-term forecast of logistics property demand. It seeks to connect supply chain activity with logistics property activity, and uses the supply data to predict future property activity.

JLL said the Q3 take-up figures showed an eight per cent quarter-on-quarter decline, but they were still over the four million sq m mark for the sixth quarter in a row.

It expects the index to expand at a slower pace in Q4 and Q1 2017, picking up again in Q2 2017.

“While on balance the Index for the upcoming quarters will sustain its upward trend, with European GDP and trade volumes set to grow further, a deterioration of economic sentiment is factored in; this reflects Brexit uncertainty, albeit it is expected to stay above its long-term average.”

Richard Evans, lead director industrial & logistics for the UK, said: “In the UK, we continue to see good levels of demand for logistics space with take-up in the first nine months of this year up 23 per cent on the same period a year ago. Much of this is being driven by e-commerce related requirements.

“Looking forward, the UK economy is expected to slow down next year and the uncertainties over Brexit will likely act as a drag on occupier demand. That said, economic pressures and change often themselves generate demand and we are still tracking a healthy level of active requirements. Supply remains very tight with the national vacancy rate at just 5 per cent.”