Outlook

30 October 2015, by Kevin Mofid

Constrained supply of smaller units meaning take-up levels of "churn stock" are not propping up the market.

 

■  Whilst take-up levels have fallen in 2015, we should still remember that levels are still above the long term averages. In the most part this has been achieved without the large food retailers being active in the market. With many of the grocers currently going through a period of naval gazing it is only a matter of time before they return to the market with large requirements.

■  With 7.9m sq ft of speculatively constructed space due for delivery in Q4 2015 and into 2016 we expect an initial up-tick and supply which will be subsequently be accompanied by an increase in take-up levels, particularly in the sub 200,000 sq ft size band.

■  As demand is still exceeding grade A supply in most areas we expect the already achieved rental growth for prime distribution units to increase and will average 6.2% per annum until 2019.

FIGURE 6

Rental growth forecasts

 
Figure 6

Source: Savills Research, IPD, RealFor

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Key Contacts

Kevin Mofid

Kevin Mofid

Director
Commercial Research

Savills Margaret Street

 

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