Warehouse demand goes unabated
Demand for UK logistics and industrial space shows no sign of slowing as transactions in the first quarter of 2021 increased by 115% compared to the same period last year, while the number of deals completed was 70% higher than a typical Q1.
New data from Cushman & Wakefield reveals that 12.5 million sq ft of industrial and logistics space was transacted in the first quarter of the year with the majority deals (94%) on existing stock. A further 16 million sq ft was under offer at the end of March 2021, with e-commerce accounting for over 50% of the total.
Overall, during the last 12 months to March (effectively the beginning of the pandemic) over 58.3 million sq ft of space has been taken, compared to an annual average take-up pre-COVID of 33 million sq ft.
Retailers, parcel delivery and 3PLs continued to drive demand, together accounting for almost 70% of quarterly take-up.
Bruno Berretta, UK Industrial & Logistics Research and Insight at Cushman & Wakefield, said: “E-commerce has accounted for 40% of take-up since the beginning of the pandemic – double pre-COVID levels. While growth might slow as the country emerges from lockdown, many ‘occupiers’ of the digital economy are still playing catch-up and requiring more space to cope with high levels of demand. In London, besides pure play e-commerce and parcel delivery companies, we are seeing several requirements coming from online groceries, dark kitchens and data centres operators, and we see this demand continuing over the next months.”
The data reveals that 12.7 million sq ft of speculative space has already been delivered or is due to complete later this year. However, despite this pipeline, availability fell 18% year-on-year during Q1 to 60 million sq ft and remains 11% below the long-term average. In Yorkshire and the North West availability is down by nearly 30% year-on-year, and by over 40% in the West Midlands. Most regions remain historically supply-constrained, with further rental growth expected as a result.
Richard Evans, Head of UK Logistics and Industrial at Cushman & Wakefield, said: “With over 16 million sq ft of space currently under offer at the end of the first quarter, 2021 is shaping up to be another strong year for the logistics and industrial sector and developers have been quick to respond to the recent surge in demand. The market response to the pandemic and ensuing lockdowns has boosted confidence, evidenced by many new speculative developments across the country.”
The largest deal of the quarter was Amazon’s letting of 700,000+ sq ft at Knowsley Business Park.