UK Logistics: 

Big Shed Briefing

Big Shed Briefing
Big Shed Briefing

31 January 2017, by Kevin Mofid

Welcome to our new format Big Shed Briefing, which provides commentary and analysis for each major logistics region Savills cover...

...along with an overview of the investment market and insight from our Building Consultancy team on project time scales and costs.

Summary

■ Insatiable demand from online retailers has seen 34.6m sq ft of warehouse space transacted across the UK in 2016 setting a new high water mark.

 

■ The surge in demand has been noted across most regions that Savills monitor. Only the North West has seen a small decline in the area of space transacted, however it should be noted there has actually been a 10% increase in deal volume.

■ Given the strong take-up and muted speculative development it should come as no surprise that supply remains critically low at just 27.6m sq ft.

■ We do not anticipate a surge in supply given the fact that just 17 units are currently under construction across the country; combined this is just 3m sq ft, even taking this development pipeline into account there is less that a year's worth of supply in the market.

■ The continued strength of the occupational market has rippled through into the investment market with £2.6bn of capital invested in the sector in 2016. Whilst our prime yield has moved out by 50bps in 2016 to 5% activity in the fourth quarter has put a renewed downward pressure on yields into 2017.

Articles from 'Spotlight: Big Shed Briefing – January 2017'

Nationwide overview

31 January 2017

Nationwide overview

2016 sees the highest amount of take-up recorded

London and the South East

31 January 2017

London and the South East

With take-up increasing dramatically and supply falling further, combined with continued robust demand, we expect further upward pressure on rents into 2017

East Midlands

31 January 2017

East Midlands

The East Midlands remains a key location to take new warehouse space as 2016 take-up levels demonstrate, however, with just 272,494 sq ft due for delivery, Grade A supply issues could emerge into 2017

West Midlands

31 January 2017

West Midlands

The continued resurgence of the automotive sector in the West Midlands is having knock on effects in the supply chain resulting in a more diverse occupier base compared to other UK regions

North West

31 January 2017

North West

We are yet to see the next wave of new speculative development to the region. With just over 1m sq ft of speculative Grade A space left a severe shortage of new space will shortly be upon us

Yorkshire & The Humber

31 January 2017

Yorkshire & The Humber

Given the recent proportions of take-up in larger size ranges there remains the case for larger units to be speculatively developed in the Yorkshire and Humber region

South West

31 January 2017

South West

With record levels of take-up and record low levels of supply there remains capacity for increased levels of speculative development across all markets in the South West

East of England

31 January 2017

East of England

For the third year running we have seen above average take-up in the market. The East of England offers occupiers a cost effective distribution location, close to major arterial roads and the East Coast ports

National Investment

31 January 2017

National Investment

For the last two years, overseas investors have accounted for just 20% of the market. Given the consistent strength of the occupational market, and the current situation regarding the value of sterling, we expect this proportion to increase

Build Cost & Programme

31 January 2017

Build Cost & Programme

Build costs and programme delivery time scales have had an upward pressure throughout 2016

Outlook

31 January 2017

Outlook

2017 to see above average take-up

 
 

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Key contacts

Kevin Mofid

Kevin Mofid

Director
Commercial Research

Savills Margaret Street