The UK logistics market had an exceptional year in 2014, and looks to remain strong in 2015.
Last year take-up for for units over 100,000 sq ft increased by 50 per cent and currently stands at 28.3 million sq ft. The increase has mostly been driven by occupiers in the retail sector adapting their supply chains for online sales, specifically for 'click and collect' services – John Lewis reported online sales up by 19 per cent over the Christmas period, with 'click and collect' accounting for 56 per cent of the orders. Amazon, Next and Waitrose have all taken up units approaching 1 million sq ft.
As a consequence, supply of all grades of logistics stock fell by over 15 million sq ft in 2014, a 40 per cent decrease. This, coupled with limited new supply and increased occupier demand indicates potential rent increases in the logistics sector for the first time in a generation.
In 2013 Savills research predicted that 50 million sq ft of industrial property will be required to match the needs of the sector and ProLogis have stated that for every €1 billion increase in online sales requires an additional 72,000 sq m (775,000 sq ft) of warehousing space.
2015 is not predicted to see the same volume of investment transactions as 2014 due to potential risks such as the general election. However, given the pricing relativities compared with other asset classes, risks to pricing are not expected.