High demand coupled with a shortage of quality logistics space in the North West will push up rental prices for the sector in 2021, the consultancy said.
In a statement, Knight Frank noted that precedented demand among e-commerce and logistics services providers saw 5.6m sq ft in the region leased last year – a 17% increase on 2019.
This year is expected to be even stronger, with around 3m sq ft already close to being transacted in the first few weeks of 2021, according to Knight Frank industrial partner Sam Royle.
“We start 2021 strongly with a number of live requirements in the market and around 3m sq ft currently in solicitors’ hands,” he said.
“With online trends continuing to push up demand for logistics property, we expect continued momentum this year with strong levels of take-up. The main issue is going to be the dearth of good quality stock in the market and a limited development pipeline.”
Prime industrial rents stood at £6.95/ sq ft in the North West last year, according to Knight Frank’s figures. “But with supply constraints, particularly for larger units, there will be continued rental growth and we expect to see rents for grade A ‘big box’ in core markets reach £7/ sq ft-plus,” Royle said.
Firms took 1.4m sq ft of logistics and industrial space across the region in Q3 2020 – a 79% increase on the same period last year, according to a report last October from agency Cushman & Wakefield.
The busy quarter took the total for the first nine months of 2020 to 3.5m sq ft, a 55% rise on the same period in 2019, the report said, further demonstrating the ongoing surge in activity and demand within the sector.
Knight Frank also said that design-and-build would become an increasingly popular approach in 2021, as occupiers continue to focus their preference on grade A accommodation, which is currently in short supply in the region.
Register for Place North West’s Industrial + Logistics event on 31 March, where speakers will include representatives from Network Space, Caddick Developments, Spawforths, and more.