Another record quarter for logistics, says CBRE
Take-up of North West industrial property in the first three months of this year hit 1.1m sq ft, the largest proportion of any UK region at 21.7% of the national total.
Total take-up across the country in Q1 stood at 5.2m sq ft, according to consultancy CBRE’s latest quarterly logistics market summary.
After a bumper 2020 for logistics, driven by the pandemic and enforced growth of e-commerce, among other factors, a record 16m sq ft of UK logistics space across 55 units was under offer at the end of the most recent quarter.
This equates to a 40% increase on the same period last year, and CBRE said it anticipates another “busy period ahead”.
In the North West specifically, 73% of take-up comprised speculatively built units, of which the majority were let to online retailers.
Availability of logistics space in the region is now at a record low of around 900,000 sq ft – 26% of the 10-year average – while 1.77m sq ft is already being built speculatively to meet current and forecast high demand, CBRE warned.
North West prime yields for the sector hardened for the third consecutive quarter, decreasing by 15 basis points, and prime rents remained flat, the report added.
“It is encouraging to see such a strong result for UK logistics take-up at the start of the year, with the North West at the forefront with the largest proportion of the UK total take-up,” said Paul Cook, senior director of CBRE’s Manchester industrial team.
“We have seen an increasing demand for both speculative and design-to-suit built units, and are working hard to increase the availability of such units to meet current and anticipated strong demand in future.”
Take-up is expected to continue increasingly over the rest of 2021, “with particular interest from the rapidly growing online retail sector.”, Cook said. Online retailers accounted for almost 50% of the total UK take-up in Q1, across 10 deals, the report found.
UK-wide availability of logistics space increased marginally quarter-on-quarter to 21.5m sq ft as of the end of March, the report added. However, there has been a noticeable jump in speculative space under construction, to 25% of the total, from 16%, in response to “unprecedented demand”.
A total of 25 logistics deals were completed across the UK in Q1, more than twice the total recorded in the same period of 2020 but total take-up was 19% lower year-on-year. This means smaller units have become increasingly popular of late, according to CBRE.
Meanwhile, take-up of speculative under-construction space across the country soared 74% quarter-on-quarter to 6.7m sq ft, representing 26% of the development pipeline. This is also the highest level seen in two years, the report said. Ready-to-occupy supply, on the other hand, has been falling for two years, and dropped by 31% year-on-year in Q1 to total 16.2m sq ft.